Turkish lira declines 7% intraday amid diplomatic dispute with US

Moneycontrol News

After both the United States and its NATO ally Turkey suspended visa services for their citizens looking to visit the other country, the Turkish lira hit a record low against a basket of currencies, including the euro and the dollar.

At 14:54 IST, one dollar fetched 3.71 lira, nearly 3 percent more than on Friday. Intraday, the lira depreciated to 3.85 to the dollar, 7 percent weaker than its previous close.

Both Turkey and the US said recent events had forced them to reassess the commitment of the other to the security of mission facilities and personnel.

The countries’ actions came shortly after the arrest of a Turkish national working at the US consulate in Istanbul for alleged involvement in the July 2016 coup attempt against President Recep Tayyip Erdogan.

Tensions between the two countries have intensified over the last few days and the lira has now depreciated for six straight sessions with experts reckoning Tuesday will be no different. If that happens, it would mark the longest stretch of continuous depreciation in the lira in over a year and a half.

In light of the drastic fall in the lira on Monday morning, many market watchers have pointed out that this is something of a problem in Asian markets.

Currency markets all over the world have gone through bouts of extreme volatility during early Asian trading hours. “Almost certainly the liquidity is a significant issue in the price action,” Andrew Bresler, Deputy Head of Sales trading for Asia Pacific at Saxo Capital Markets in Singapore, told Bloomberg.

“This is always the problem with negative news events in early Asia trading timezone. Fewer market participants will exacerbate the move,” Bresler said.