Turkish lira tumbles to new low against dollar

ISTANBUL – Agence France-Presse

REUTERS Photo

Turkey's embattled lira on April 15 tumbled to a new low in value against the dollar.
      
The lira broke above the psychologically important level of 2.7 to the dollar to trade at 2.703 to one dollar, a loss in value of 0.57 percent on the day.
      
The lira is being pressured by the possibility of the US Federal Reserve raising rates and domestic jitters over the coherency of Turkish economic policy under President Recep Tayyip Erdogan.
      
Markets have been spooked by fears that Deputy Prime Minister Ali Babacan could be jettisoned from the cabinet after the June 7 legislative elections.
      
The Turkish Central Bank on April 14 took the hugely unusual step of publishing the agenda of its next monetary policy meeting on April 22 which will include measures to support the lira, including a cut in foreign exchange deposit lending rates.
      
This announcement initially helped support the lira on Tuesday but these gains were wiped out in early trading Wednesday.
      
The lira has lost almost 16 percent in value over the last three months against the dollar, in a major worry for the government ahead of the polls.
      
"Given the political uncertainties regarding the outcome of the elections, we think that the Turkish lira will remain weak and trade in a range of 2.60-2.80" to the dollar, said Özgur Altuğ at BGC Partners in Istanbul.
      
He assumes the central bank would "intervene gradually by tightening Turkish lira liquidity to stop further bleeding."