Turkey has pledged it will take action to calm markets after the lira plunged to a new record low in Asian trading.
ISTANBUL: The Turkish lira sank to a fresh record low of 7.24 to the dollar in early Asia Pacific trade, as investor worries over the state of the economy and deteriorating ties with the United States continued to drag down the currency.
“From Monday morning onwards our institutions will take the necessary steps and will share the announcements with the market,” Berat Albayrak said.
On Friday, the lira lost 20% of its value versus the dollar. It had already fallen more than 40% in the past year.
By 1903 GMT on Sunday – early Monday morning in the Asia Pacific – the lira was at 7.06 against the dollar, after touching 7.24 earlier.
The Turkish lira has lost about 40 percent of its value this year, largely over worries about President Tayyip Erdogan´s influence over the economy, his repeated calls for lower interest rates in the face of high inflation, and a row with the United States.
Why is the lira falling?
Experts have blamed the drop in the lira on fears the country is falling into an economic crisis.
The Turkish stock market has also fallen 17%, while government borrowing costs have risen to 18% a year, according to Andrew Walker, the BBC World Service economics correspondent.
Meanwhile, inflation has hit 15%.
Investors are worried that Turkish companies that borrowed heavily to profit from a construction boom may struggle to repay loans in dollars and euros, as the weakened lira means there is now more to pay back.
Then there are Turkey’s worsening relations with the US. Donald Trump’s administration hit Turkey’s justice and interior ministers with sanctions last week, a reaction to the detention of American pastor Andrew Brunson, who has been held for nearly two years over alleged links to Turkish political groups.
The US dealt Turkey and the lira a further blow in a tweet on Friday, in which Mr Trump said he had approved the doubling of tariffs on Turkish steel and aluminium.’