Yesterday’s Turkish Lira’s performance was troubling to say the least.
Turkey’s already weak currency has taken another blow on Wednesday, dropping 4 per cent on the day. It is dangerously close to TL4 to the dollar making everyone in Ankara nervous.
It was the worst single day since the failed coup when it depreciated nearly 5 per cent. It’s now down by 12 per cent in the year to date.
The currency just can’t catch a break in 2017, with the investors dumping the lira despite moves by the central bank to free up foreign exchange liquidity earlier this week.
Policymakers kept rates unchanged last month after a November hike, but warned this week they would “take necessary measures against unhealthy price formations inconsistent with economic fundamentals”.
And the general environment does not look good for the future of the Lira either. The crumbling tourism industry, the terrorist activity and the continuing turmoil in Turkey’s neighborhood, as well as the more conservative US monetary policies expected by the Trump’s administration, give us an idea of lies ahead.