Turkish lira hits weakest level since mid-December

A merchant counts Turkish lira banknotes at the Grand Bazaar in Istanbul, Turkey, March 29, 2019. REUTERS/Murad Sezer

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ISTANBUL, May 9 (Reuters) – The Turkish lira fell 0.3% on Monday to its weakest level since last December, when a currency crisis propelled it to record highs following a series unorthodox interest rate cuts.

The lira touched 14.9950 to the dollar, matching the level reached on March 11 and leaving it 12% weaker than at the end of 2021. It slipped 44% last year.

On December 20, it hit a record high of 18.4, triggering state measures to support the lira through major foreign exchange market interventions and a program to protect lira deposits against depreciation.

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Traders said the central bank would likely intervene on Monday to keep the lira below 15 against the dollar.

The currency has been relatively stable for much of this year, but slipped in March when Russia invaded Ukraine. Western sanctions on Russia have driven up energy prices, pushing up Turkey’s already hefty import bill. Read more

Last year’s crisis was triggered by an aggressive easing cycle that President Tayyip Erdogan pushed through despite rising inflation. That, combined with the fallout from the war, pushed inflation to 70% in April and widened the current account deficit. Read more

This threatens to derail Erdogan’s economic plan, which aims to achieve a current account surplus and keep interest rates low to help boost growth, exports and jobs.

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Reporting by Daren Butler; Editing by Ece Toksabay and Jonathan Spicer

Our standards: The Thomson Reuters Trust Principles.

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