Turkish Lira in downtrend

Published on: 13-May-2019
Category: Trading
Last updated: 13-May-2019

Turkish Lira in downtrend

In Turkey, new tensions continue to create uncertainty among investors and investors. The Turkish lira continues to weaken and has fallen 1.3 percent against the dollar to 6.05 lira per dollar. There are many reasons for this, such as the situation, the local elections and mayoral elections in Istanbul, the monetary policy of the Turkish central bank or the tensions between Turkey and the USA and the EU. Already last year, the lira fell by 29 percent and this year in just four months by eleven percent.

The fact that Turkey is drilling for oil and gas off the coast of Cyprus also causes discontent internationally. The US sees new potential for tensions in the region and Cyprus is also working against attempts by Turkey to seek oil there. For example, the small island state has issued an international arrest warrant for the occupation of a Turkish ship that has been in Cypriot territory.

In addition, the president Tayyip Erdogan has had to repeat the mayoral elections which took place in the end of March and which lost Erdogan's party AKP for the first time in years. He accuses the electoral workers of fraud and accuses them of being supporters of the Gülen movement.

The Turkish central bank leaves the key rate unchanged and thus at 24 percent. Contrary to a previous statement by the central bank that it raises interest rates in an emergency, it has now rejected this statement. Inflation was nearly 20 percent in Turkey in March and almost 25 percent last year. The increasing loss of value of the lira, the stagnant central bank's interest rate and political decisions by the president continue to make investors withdraw their capital from the country and investors shun the Turkish market.



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