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Turkey’s lira weakens more than 6% on threat of more US sanctions

SAMAA | - Posted: Aug 17, 2018 | Last Updated: 2 years ago
SAMAA |
Posted: Aug 17, 2018 | Last Updated: 2 years ago
Turkey’s lira weakens more than 6% on threat of more US sanctions

Turkey’s battered lira weakened more than 6 percent against the dollar on Friday, after a U.S. warning that Ankara should expect more economic sanctions unless it hands over detained American evangelical pastor Andrew Brunson.

It has lost nearly 40 percent of its value against the dollar this year, hit by both the diplomatic rift and investor alarm about President Tayyip Erdogan’s influence over monetary policy. Erdogan, a self-described “enemy of interest rates”, wants to lower borrowing costs despite high inflation.

The currency crisis has deepened concerns about the broader economy – particularly Turkey’s dependence on energy imports and whether foreign-currency debt levels pose a risk to the banking sector.

“There has been no sign that the central bank will be allowed to raise interest rates significantly and return rates to positive territory,” said William Jackson of Capital Economics in a note to clients. “Similarly, there has been no improvement in relations with the U.S. and additional sanctions may be on the horizon.”

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