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Turkey’s lira weakens due to investor unease over Syria conflict, coronavirus: report

A teller holds Turkish lira banknotes at a currency exchange office in Istanbul on August 13, 2018. Turkey's troubled lira tumbled on August 13 to fresh record lows against the euro and dollar, piling pressure on stock markets on fears the country's crisis could spill over into the world economy. / AFP PHOTO / Yasin AKGUL

The Turkish lira weakened 0.8 percent on Monday as investor unease about the conflict in neighboring Syria was amplified by a global flight to safe havens in the face of the coronavirus spread, according to Reuters.

The lira stood at 6.1535 against the dollar at 0955 GMT, weakening from a close of 6.1045 on Friday and hitting its weakest level in regular trade since last May.

The Turkish currency has fallen more than 3 percent this year, in addition to losing 36 percent over the last two years in a slide triggered by a currency crisis in 2018.

On the coronavirus issue, the large spike in Italian cases has especially rattled investors on concerns about the potential for the virus to spread deeper into Europe and cause economic disruption there.

Turkey has closed its border with Iran and halted incoming flights as a precaution to stop the potential spread of the virus. Iran said 12 people have died and up to 61 have been infected by the virus.

Separately, Turkey has thousands of troops stationed and poised for battle in Syria’s Idlib and announced on Saturday that its 16th soldier had been killed there.

President Recep Tayyip Erdoğan has said he will meet with his Russian, German and French counterparts on March 5 to discuss Idlib, where Syrian government forces are pushing to retake the last large rebel-held region after nine years of war.

Investors have also been rattled by Ankara’s interventions in the currency market that diminish the country’s foreign exchange reserves. Traders and bankers say state banks have renewed efforts this year to buffer the lira after they sold some $30 billion last year.

On Friday ratings agency Fitch affirmed Turkey’s “BB-“ rating with a stable outlook, saying the rating reflected weak external finances, a track record of economic volatility, high inflation, and political and geopolitical risks.

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