Turkish Lira sinks below 2.3 against US dollar despite Central Bank action

ISTANBUL - Agence France-Presse

A clerk counts US dollars at a currency exchange office in Istanbul on Jan 23. AFP photo

The Turkish Lira dived through the key barrier of 2.3 to the dollar on Jan. 24 despite massive central bank intervention on foreign exchange markets the day before.

The currency sank to a low of 2.3360 against the greenback before recovering slightly to 2.3274 in mid-afternoon trade, and hit 3.2069 to the euro before clambering back to 3.18622.

The further declines came just a day after the Central Bank ploughed at least $2 billion into the foreign exchange markets to try to prop up the lira.

The Turkish currency has been hitting record lows almost daily this year, under pressure from an escalating political crisis and concerns about the economy.

It has lost over 10 percent since mid-December in turmoil not seen since the 2000-2001 financial meltdown, and economists forecast that further falls are on the cards.

Finansbank in Istanbul said the central bank may try to contain further pressure on the currency by resorting to its foreign currency war-chest.

But that it was unlikely to be sustainable and instead called for a "proper" rate hike. The bank shied away this week from raising interest rates at its monthly policy meeting, with the government keen not to dampen economic growth further or risk higher inflation.