Dollar/lira highest since March local elections

ISTANBUL

The lira weakened to above 2.16 against the U.S. dollar Aug. 6, hitting its lowest level since March 31 due to emerging markets weakening through geopolitical tensions and anticipations that rating agency Moody’s Turkey announcement will be negative.

The lira/dollar ratio, which started the morning of Aug. 5 below 2.13, was traded at around 2.1610 and 2.1615 in the morning of Aug. 6, weakening below the level it was traded on March 31, a day after local elections that cooled down escalated political tension of the pre-election period.

The Turkish currency weakened after Turkish Economy Minister Nihat Zeybekci implied Moody’s, which will make an announcement on its view of the Turkish economy on Aug. 8, might comment negatively.

In his remarks on Aug. 5, the minister said Moody’s should make a positive revision, but added he expects a negative movement, considering its previous judgments, which according to him are “politically motivated.”

A few hours after Zeybekci’s comments, another ruling Justice and Development Party (AKP) Deputy Salih Kapusuz, posted a message hinting the same thing on his Twitter page.

“We hear those who try to provoke a crisis before every presidential election are in pursuit of another crisis. There are rumors suggesting there are some attempts to reduce Turkey’s credit rating ahead of the elections. We hope these are not true. We know credit rating agencies like Standard&Poor’s and Moody’s have reduced Turkey’s note on subjective criteria,” Kapusuz wrote, further stirring fears over a reduction.

Reports of a rise in Russian troops lining the Ukrainian border, which points to more tension between the West and Russia, have also caused most emerging market currencies to underperform.