Turkey’s lira slipped to its weakest since mid-May late on Friday after Fitch said the country still faces external financing risks and that its monetary easing cycle has neared an end, after inflation jumped more than expected, Reuters reported.
The currency, which hit a record low on May 7, was worth 6.865 versus the dollar to close the week, after sliding to as far as 6.88 in late-day trading. The move broke it out of a very tight range over the last two weeks.
Data earlier on Friday showed inflation jumped more than expected to 12.6 percent year-on-year in June, drifting further from a central bank target and prompting analysts to predict interest-rate hikes were on the horizon.
Last week the bank unexpectedly halted a nearly year-long easing cycle in the face of a 13 percent drop this year in the lira, depleted FX reserves and the country’s relatively high external obligations.
The Fitch ratings agency said there are “sizeable downside risks” to its expectation that Turkey’s balance of payments will stabilize in the second half of the year. “External pressures remain Turkey’s main credit weakness,” it said.
