Turkish currency slides to weakest level since May: report

0
AFP PHOTO / OZAN KOSE

Turkey’s lira slid to its weakest level in daily trade since May on Thursday after the government’s latest heavy-handed effort to curb market volatility exacerbated lingering concerns over Ankara’s deteriorating relationship with Washington, Reuters reported.

The currency, still vulnerable after last year’s crisis in which it shed nearly 30 percent against the dollar, was on track for its fifth straight day of losses and was the worst performer among emerging market peers.

While authorities have taken several unorthodox steps to stabilize the lira, it is down 11 percent so far in 2019. Continued weakness, on the other hand, could help Turkey limit imports and achieve the government’s ambitious 5 percent GDP growth forecast for 2020.

The lira on Thursday weakened as far as 5.9425 against the dollar, which itself was sliding after President Donald Trump was impeached by the US House of Representatives. At 1200 GMT it stood at 5.9390.

Late on Wednesday a regulator said it would rein in some derivatives trading by lowering the limit on banks’ currency swaps, forwards and options with non-residents with a maturity of up to seven days, in which local banks receive forex at maturity.

The new limit will be 10 percent of the bank’s regulatory capital, down from 25 percent.

The move followed a pattern of tightening control over financial markets. In late May, for example, the Banking Regulation and Supervision Agency (BDDK) imposed a settlement delay for FX purchases by individuals of more than $100,000.

The lira has been the worst performer among peers in December, a reflection on worsening ties with NATO ally Washington.

Liked it? Take a second to support Turkish Minute on Patreon!

LEAVE A REPLY