New blow to Turkish lira at sensitive time worries Erdogan's party

The Turkish lira has seen a new collapse at a sensitive time for Erdogan's Justice and Development Party (AKP), which is expected to affect his popularity in the upcoming municipal elections.

The Turkish lira fell more than 5 percent against the US dollar on Friday, its biggest one-day drop since the currency crisis gripped last August, Reuters reported.

The decline has raised concerns that the Turks will increase their foreign exchange purchases amid a deterioration in relations with the United States, which could push Turkish voters to vote against the ruling Justice and Development Party (AKP).

The lira hit 5.7549 against the dollar, its lowest level since last October, down 5.3 percent from the previous close of 5.4650.

The lira lost about 30 percent of its value against the dollar last year as investors worried about the central bank's ability to curb inflation amid calls from Turkish President Recep Tayyip Erdogan to cut borrowing costs.

The weakness of the lira appears to have prompted the country's central bank to try to tighten monetary policy to stop the decline, the Financial Times newspaper quoted economic analysts as saying.

The decline in the bank's foreign currency reserves resulted from foreign exchange sales of $ 5.33 billion to energy importing companies and external debt repayments, a central bank official told Reuters.

But the ruling party and Erdogan worry that the Turkish lira will collapse at a very sensitive time as the party prepares to run for municipal elections on March 31 amid economic and political crises Turkey has been suffering for years.

The pound fell on Friday when Erdogan said US President Donald Trump's move to recognize Israeli sovereignty over the Golan Heights, captured by Israel from Syria in the 1967 Middle East war, had pushed the region to the brink of a new crisis.

Erdogan's comments renewed concern over a possible deterioration in relations between the two countries already strained by Turkey's acquisition of Russian S-400 missile defense systems.



Other news