News ID: 219991
Published: 0803 GMT August 17, 2018

Lira comes under new pressure

Lira comes under new pressure

The Turkish lira was slightly weaker in Asian trading on Friday, a day after the currency came under fresh pressure after the US warned that new sanctions would be imposed on Turkey if a detained American evangelical pastor was not released.

The embattled currency had been steadily strengthening in recent days after steps to clamp down on short selling and reassurances from the government that it would not impose capital controls, wrote.

But it reversed much of the day’s gains on Thursday after Steven Mnuchin, US Treasury secretary, said Washington had prepared further measures against Ankara. The Trump administration has already imposed sanctions on two Turkish ministers and increased tariffs on Turkish steel and aluminum imports.

“We have more that we’re planning to do if they don’t release him quickly,” he said, referring to Andrew Brunson, an evangelical pastor held in Turkey on terrorism charges.

US President Donald Trump added at a cabinet meeting: “They want to hold our wonderful pastor. Not fair, not right.”

The comments by Mnuchin came shortly after Turkey’s new finance minister made overtures to thousands of foreign investors in an attempt to navigate out of the crisis that has hit the currency and shaken global emerging markets.

The lira had strengthened by one percent against the dollar as Berat Albayrak, who is also the son-in-law of Turkish President Recep Tayyip Erdogan, promised measures to rein in fiscal spending, forcefully ruled out capital controls and insisted that the country’s banks were strong. 

But Mnuchin’s announcement shortly after Albayrak’s investor call ended undid much of those gains. 

The lira lost 3.6 percent of its dollar value immediately after Mnuchin’s statement, although it still ended the day slightly higher than the previous close. The Lira was 0.5 percent weaker at 5.8475 to the dollar in Asian trading.

The lira had rallied for three straight days this week as Turkish regulators clamped down on speculative selling. The currency is still down almost 15 percent for August alone, with Turkey’s stock market and bonds also under pressure.

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