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29 Aug 2018 13:29
After last week's long public holiday, the lira fell further on Monday with economists warning the fears over the health of the Turkish economy remain.(Ozan Kose/AFP Photo)
The Turkish lira showed no sign of recovery as it slid further against the US dollar on Wednesday, hours after Moody’s downgraded its credit ratings on 20 Turkish financial institutions.
The currency has been hit by concerns over monetary policy under President Recep Tayyip Erdogan but deteriorated further this month after a public spat with the United States.
The lira lost nearly a quarter of its value against the greenback in the past month and over 40 percent since January.
The lira was trading at 6.4 to the dollar around 11:00 GMT on Wednesday, a loss of 3 percent. The lira lost a similar percentage against the euro, trading at 7.5.
After last week’s long public holiday, the lira fell further on Monday with economists warning the fears over the health of the Turkish economy remain.
Ratings agency Moody’s on Tuesday downgraded 14 banks by one notch and four others — including major lenders Denizbank and Is Bank — by two notches.
The Turkish central bank on Wednesday morning reiterated that it would provide banks with “all the liquidity that they needed” as it doubled banks’ borrowing limits for overnight transactions from levels before August 13, effective from Wednesday.
The Turkish statistics office also announced the economic confidence index fell to 83.9 in August, down from 92.2 in July and 104.9 in January.
The reading is the lowest since March 2009.
With inflation running at close to 16 percent and the current account deficit widening but the central bank refusing to tighten monetary policy, investors have yet to be persuaded by Ankara’s helmsmanship of the economy.
And the spat with the United States over a detained American pastor prompted Washington to slap sanctions on two Turkish ministers and double tariffs on aluminium and steel imports from Turkey, prompting further misery for the lira.
Earlier in August, the lira reached above seven to the dollar for the first time ever.
Washington has threatened to hit Ankara with further sanctions if pastor Andrew Brunson is not released from house arrest, with President Donald Trump insisting Brunson is innocent.
Turkish Treasury and Finance Minister Berat Albayrak — also Erdogan’s son-in-law — has sought to assuage investors’ concerns by insisting that his medium term plan to be announced early next month will tackle the issues bedevilling the Turkish economy.
© Agence France-Presse
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