Turkish lira hits record low beyond 7.49 against dollar

Wednesday September 9, 2020

Turkey’s lira weakened to a record low beyond 7.49 against the dollar on Wednesday under the impact of rising risk aversion, which raised selling pressures globally.

The lira TRYTOM=D3 hit a low of 7.4920, bringing losses against the U.S. currency this year to nearly 21%, among the world’s worst performers. However, it has outperformed emerging market peer currencies in the latest sessions.

By 0745 GMT, the lira edged back to 7.4870.

With the Turkish currency having fallen in six of the last seven sessions, investors are still looking for signals as to whether the central bank has halted its month-long backdoor policy tightening.

The central bank has tightened credit since a sell-off hit the lira from the end of July. The average cost of funding CBTWACF= rose and then steadied near 10.15% in recent days. The bank’s policy rate is 8.25%. Finance Minister Berat Albayrak was reported on Wednesday as saying Turkey can capitalise on the legacy of the global coronavirus crisis by putting a competitive lira at the heart of a new strategy to move to a more export-focused economy.

In response to emailed questions from Bloomberg, Albayrak said all leading indicators indicate economic recovery is gaining pace in the third quarter and Ankara expected the second half recovery to be “V-shaped”.

“I believe our growth rate will be significantly above 5% in 2021 if there won’t be another major wave in the outbreak,” he said.

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