Turkish lira falls to record low against dollar

ANKARA

REUTERS Photo

The Turkish Lira dropped to its lowest rate, 2.742, against the U.S. dollar on April 24, as the euro gained excessively.

The euro rose to 2.9 liras, nearly 1 percent in just one day. 

The fall came after Turkey’s Central Bank announced two days earlier that a key interest rate would remain unchanged at 7.5 percent, despite expectations the rate would be raised to address the lira’s fall against the dollar.

The Central Bank sold $60 million liras in an auction that was announced earlier to stand at a minimum of $30 million, to defend the lira. 

The price was marked at 2.7228 liras per dollar at the highest and 2.7211 at the lowest.

“The decline in the lira against the Turkish Lira U.S. dollar started right after the Central Bank’s decision to hold rates,” said Adnan Çekçen, a financial analyst at Destek Securities in Istanbul.

“The absence of a rate change at this meeting and also their abstinence from implementing additional measures to stem the slide in the lira, which they hinted at recently, pushed the rate to higher levels,” he said.

Çekçen said the lira’s record low against the dollar was caused by markets anticipating the Central Bank’s non-intervention.

“Markets had been expecting a decisive move from the Central Bank but its dovish stance and its unchanging statements boosted the anticipation that the dollar would rise higher,” he told the Anadolu Agency.

“Now markets believe levels near 2.70 are not a concern for the Central Bank, as it did not step in with decisive action,” he said.

The Turkish government has been pushing the Central Bank to cut rates further but the Bank has been choosing a more moderate course. 

Meanwhile, the U.S. Treasuries prices rose on April 24 as data showing weakness in U.S. business investment in March supported the view that it is unlikely the Federal Reserve will signal next week it is close to raising interest rates. The absence of a breakthrough in debt negotiations between Greece and its creditors also underpinned safe-haven demand for low-risk government debt, analysts said.

European shares rose in early deals on Friday, boosted by encouraging earnings reports, with investors also cautiously optimistic over the prospects of a deal over Greece’s debt crisis.