News ID: 219618
Published: 0514 GMT August 09, 2018

Turkish lira tumbles as Turkey-US rift continues

Turkish lira tumbles as Turkey-US rift continues

Turkey's lira tumbled to another record low against the dollar on Thursday after a Turkish delegation returned from meeting US officials in Washington with no apparent solution to a diplomatic rift that has opened up between them.

The two governments are at odds over the detention in Turkey of US evangelical pastor Andrew Brunson on terrorism charges, and the rift has deepened investor concerns about Turkey's future under President Recep Tayyip Erdogan.

The lira stood at 5.4650 against the dollar at 1356 GMT, down more than 3 percent from the previous day's close and after sliding to an all-time low of 5.48, Presstv Reported.

The delegation of Turkish officials arrived back in Turkey on Thursday, a source from the foreign ministry said, a day after it met with officials from the US State Department and Treasury to try to resolve disputes between the NATO allies.

There was no immediate comment from Ankara on whether the meetings were successful.

The lira has lost nearly a third of its value this year, mainly fuelled by worries about Erdogan's influence over monetary policy.

"You have some very odd politics with the President interfering with monetary policy - they are picking fights with Europe, they are picking fights with the Americans," said Paul McNamara, an investment director at GAM London Limited.

Ankara and Washington also disagree over their military interventions in the Syria war, Turkey's plan to buy missile defense systems from Russia and the US conviction of a Turkish state bank executive on Iran sanctions-busting charges in January.

The Treasury and Finance Ministry said in a statement 2019 GDP growth is seen around 3-4 percent and the current account deficit, one of the primary worries about Turkey's economy, would fall to 4 percent of the GDP.

It also said minister Berat Albayrak would announce the latest plan for the economy on Friday.

Pressure on the lira briefly eased following the statement.

Erdogan, who has said interest rates are the "mother and father of all evil", wants banks to lend cheap credit to fuel growth.

Investors fear the economy is overheating and could be due for a hard landing. They have also expressed doubt over the ability of the central bank to rein in persistent double-digit inflation with the president repeatedly calling for lower rates.

"If nothing is done, it would mean that a bigger price will be paid in terms of growth to get out of the inflation-exchange rate-inflation spiral," said Seyfettin Gursel, director of Bahçeşehir University Economy and Social Research Center.

"The basic reason that the exchange rate has gone off the rails is that the confidence in the economy management has disappeared both domestically and abroad."

The main BIST 100 index was up nearly 1 percent at 1359 GMT.

 
   
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