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Turkish lira hits record low against the dollar
(MENAFN- Arab News) ISTANBUL: The Turkish lira hit a record low against the dollar on Friday hit by political uncertainty and security concerns and as investors digested US jobs data that kept alive expectations for a rate hike in the world's largest economy.
The lira began its latest weakening trend on Thursday after August inflation data came out higher than expected with annual consumer price inflation rising 7 percent on high food prices.
However the political pressures generated by a snap parliamentary election on Nov. 1 were expected to discourage the Turkish Central Bank (CBT) from raising rates in response.
'It seems like the CBT is reluctant to go for a rate hike before elections hence the continued lira (TL) weakness' Tera Brokers said in a note.
'Ironically it is becoming a vicious circle; TL depreciation pushing up inflation which then triggers more TL weakness' it said noting that the currency had lost 22 percent of its value against the dollar this year.
The central bank highlighted the lira in its monthly statement on price developments saying its loss in value was evident in the August inflation data.
The lira touched an all-time low of 3.0085 in late trade a 22 percent slide so far this year and exceeding the previous low of 3.0020 which it hit in late on Aug. 20.
Political uncertainty has been generated by the ruling AK Party's failure in the June 7 election to sustain the single-party rule which it has enjoyed since first coming to power in 2002. Opinion polls suggest it might again fail to win a parliamentary majority in the November vote.
Conflict with Kurdish militants and Daesh terrorists in Syria has meanwhile triggered security worries.
Investors also weighed up data showing US job growth slowed in August while the unemployment rate dropped to a near 7-1/2-year low and wages accelerated keeping alive prospects of a Federal Reserve interest rate hike later this month.
The main BIST 100 share index closed 1.42 percent lower at 72950.11 points. The benchmark 10-year government bond.
The lira began its latest weakening trend on Thursday after August inflation data came out higher than expected with annual consumer price inflation rising 7 percent on high food prices.
However the political pressures generated by a snap parliamentary election on Nov. 1 were expected to discourage the Turkish Central Bank (CBT) from raising rates in response.
'It seems like the CBT is reluctant to go for a rate hike before elections hence the continued lira (TL) weakness' Tera Brokers said in a note.
'Ironically it is becoming a vicious circle; TL depreciation pushing up inflation which then triggers more TL weakness' it said noting that the currency had lost 22 percent of its value against the dollar this year.
The central bank highlighted the lira in its monthly statement on price developments saying its loss in value was evident in the August inflation data.
The lira touched an all-time low of 3.0085 in late trade a 22 percent slide so far this year and exceeding the previous low of 3.0020 which it hit in late on Aug. 20.
Political uncertainty has been generated by the ruling AK Party's failure in the June 7 election to sustain the single-party rule which it has enjoyed since first coming to power in 2002. Opinion polls suggest it might again fail to win a parliamentary majority in the November vote.
Conflict with Kurdish militants and Daesh terrorists in Syria has meanwhile triggered security worries.
Investors also weighed up data showing US job growth slowed in August while the unemployment rate dropped to a near 7-1/2-year low and wages accelerated keeping alive prospects of a Federal Reserve interest rate hike later this month.
The main BIST 100 share index closed 1.42 percent lower at 72950.11 points. The benchmark 10-year government bond.
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