Turkey’s lira slides as Central Bank raises inflation forecast
Despite state bank efforts to bolster Turkey’s currency, the lira fell to its lowest point since May against the dollar this week, prompting fears of a renewed currency crisis.
ISTANBUL — Following two months of stability brought about by heavy state bank spending, the Turkish lira is volatile once more, falling to about seven per US dollar and hitting record lows against the euro this week.
The slide came as state banks sold at least $2.5 billion Monday and Tuesday to prop up the currency as demand for foreign currency widened the nation’s current-account deficit, according to reports by Bloomberg News.
The latest fluctuation comes after a global economic downturn caused by the COVID-19 pandemic sent shocks through the Turkish economy, devaluating the lira this spring and financial analysts now fear Turkey could experience a new currency crisis if monetary policies remain unchanged.
Along with Argentina’s peso, the lira was one of few major emerging-market currencies to fall against the dollar since March, over a period in which the US currency has slid to a two-year low, according to the Bloomberg Dollar Index, underlining weakness in the Turkish currency.
