Nifty99000 100%

Sensex99000 100%

Article rating: 4.2
Article rating: 4.8
Article rating: 4.3
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.0
Article rating: 4.0
Article rating: No rating
Article rating: 3.0


Nerves taut as Turkish Lira slides

Author: Bharath Sunnam/Wednesday, August 15, 2018/Categories: Currency

Nerves taut as Turkish Lira slides

The Turkish Lira’s recent freefall that eroded more than three quarters of its value in 2018 against the US dollar has sent tremors through other emerging currencies which fear a trickle-down effect.

The USD-TRY (Dollar-Lira) pair made a high of 6.7776 on Monday, following the announcement by US President Donald Trump to double the tariffs on steel and aluminum from Turkey amidst a diplomatic rift.

However, the trade sanction by the US may not be the only reason leading to the fall of the Lira. Turkey’s domestic economic prospects have worsened with inflation rising to 15.85 per cent in July, government borrowing in foreign currencies inching up and current account deficit reigning at high levels. Meanwhile, the Central Bank of Turkey (TCMB) took no steps to arrest the fall of the Lira as Turkey’s President President Recep Tayyip Erdoğan openly resisted interest rate hike to defend the currency.

Investors has earlier raised concerns over the President appointing his son-in-law Berat Albayrak as the finance minister as it would further dent the independence of the Central Bank. Erdogan is also a proponent of cheap credit from banks that would fuel growth.

Worried about contagion effects on large European banks with exposure to Turkish assets, investors across the globe rushed for shelter. Following this, Turkish treasury minister Albayrak said the government had prepared an action plan to support the Lira and would start implementing it from this week. As the central bank also pledged to support to provide required liquidity to ensure financial stability, the Lira pulled back, soothing nerves after a tumultuous session.  

However, the clouds of recession continue to hover over Turkey which would cast its gloom on the investor sentiment, supporting the dollar and pushing the emerging economies currencies lower.

The author is fundamental research analyst at Karvy Forex and Currencies Private Limited

Print Rate this article:

Number of views (442)/Comments (0)

rajyashree guha

Bharath Sunnam

Other posts by Bharath Sunnam
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free