Turkish lira slides on trade war unease, hit by “flash crash”

After having gained in recent months, the lira has been newly pressured by concerns over possibly rapid loan growth

The Turkish lira weakened more than 1% against the dollar on Monday, after briefly tumbling to 6.47 overnight in what market watchers described as a “flash crash” as Japanese investors cut risk assets over Sino-U.S. trade war worries.

The lira stood at 5.8160 against the dollar at 0628 GMT, weakening from a close of 5.7540 on Friday. After a currency crisis wiped nearly 30% off the lira’s value in 2018, it has fallen 9% this year.

The China-U.S. trade war, which intensified in recent days, “means that EM FX will continue to weaken for the foreseeable future. In the absence of a thawing in trade frictions it remains a market to be structurally short EM and buy dollars on any dip,” currency analysts at Societe Generale said in a note.

On Friday, U.S. President Donald Trump announced an additional duty on some $550 billion of targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. goods.

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