Currency falls against the dollar on concerns over the independence of its central bank.
Strained relations with the US influence the currency depreciation.
The Turkish lira has deepened in acute losses dominate their operational since September. The currency has marked a new low in the vicinity of the four units per dollar, from which dates back marginally. Against the euro, it has also reached an unprecedented change in the 4.6754 liras.
The downward trend in which Turkey has embarked currency since September, rising to 17% losses against its US counterpart, to stop right in the 3.9818 liras. With regard to the single currency accumulates a decline of 13% in the same period.
In recent months, concerns about the tense relations between the US and the government of Ankara and doubts about the independence of the central bank have increased, causing sales of the currency.
The central bank is faced with the unenviable task of trying to balance the double-digit inflation with the demands of President Tayyip Erdogan of reduction of interest rates, currently at 8%. The supervisor has responded with emergency measures to tighten policy, but that has failed to reverse the decline. The supervisor has announced that it will eliminate the borrowing limits of banks in the interbank money market transactions a day and increase your limit for intraday liquidity facility, both measures designed to prop up the currency.
In fact, the collapse has caused the rise in inflation to 11.90% in October to increase the cost of energy and other imports, thereby affecting the trade deficit given that the country imports almost all its energy needs .
TENSION WITH US
Concerns about US relations with focus on the trial of Turkish gold trader Reza Zarrab, accused of violating US sanctions against Iran. Turkish government spokesman recently described the case as a “clear conspiracy against Turkey,” which has no legal basis.
“The management of relations has been clearly alarming,” said William Jackson of Capital Economics. “Turkey and the US. Historically have had close ties, but if the events of recent months are observed suggest that relations are deteriorating and that certainly is a big concern for investors, “he added.
Foreign inversiores of which depends on Turkey to finance its large budget and current account deficits are also deeply concerned about political pressure on the central bank. Erdogan wants a cut in interest rates to boost lending and construction and has signaled it plans further interference. Speaking specifically last week he said the lack of government intervention in politics had left Turkey with high inflation.