The Turkish lira hit a record low against the dollar yesterday, influenced by investor concerns about possible US sanctions, tense relations with the European Union and the ongoing conflict in the Caucasus.
According to “Reuters”, the currency lost 24 percent of its value this year due to concerns about diminishing foreign exchange reserves at the central bank, costly interventions in the exchange market and geopolitical problems.
The lira recorded new lows at 7.8850 against the US currency, weakening its price from the previous closing of 7.8050 pounds. By 12:32 GMT, the rate was 7.8800 per dollar.
And renewed concern about possible US sanctions after “Bloomberg” published yesterday that Ankara will soon begin testing the Russian S-400 air defense system.
Meanwhile, tensions with the European Union appeared to escalate, after President Recep Tayyip Erdogan said on Tuesday that “the decisions of the Union summit last week regarding disputes including maritime rights in the Eastern Mediterranean were not sufficient to resolve the differences.”
In addition, the dollar yesterday leaned lower against most currencies after it initially jumped after President Donald Trump canceled talks on economic stimulus with Democratic lawmakers in a move that boosted demand for safe-haven assets, according to “Reuters”.
Trump’s sudden decision to suspend stimulus talks until after the presidential election on Nov. 3 sparked a sell-off on Wall Street, as investors brace for the risks of a new downturn in the already battered US economy.
In general, analysts said, “The renewed uncertainty over the stimulus will dampen investors’ appetite for trading high-risk currencies and enhance their caution.”
In early transactions in Europe, the dollar last traded at 1.1754 against the euro, down 0.18 percent, after rising 0.4 percent, against the single currency in the previous session.
The pound traded against 1.2915 dollars, up 0.36 percent, after falling 0.86 percent, the day before yesterday, while the Australian dollar rose 0.57 percent, to 0.7142 dollars, after it fell by more than 1.1 percent, Tuesday.
Traders say, “The Australian dollar faces more downside risks due to expectations that the RBA’s next step will be to cut interest rates and buy more government debt.”
However, the increased risk aversion did not lead to a significant change in the dollar against the yen, as it was most recently traded at 105.75 yen, as analysts say “there is a tendency to buy both currencies in times of uncertainty.”
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