Home Money & Commodities Turkish lira weakens to 6 vs dollar for first time since Oct

Turkish lira weakens to 6 vs dollar for first time since Oct

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ISTANBUL: The Turkish lira slipped on Monday to a low of 6.02 against the dollar before recovering a bit, the first time since October it crossed that threshold, as investors awaited a possible resolution to challenges to Istanbul election results.
After shedding some 30 percent of its value last year, the currency has recently come under pressure due in part to worries over a possible re-run of the March 31 local election, which President Tayyip Erdogan’s AK Party lost but appealed.
The lira, which has weakened 11 percent against the dollar this year, traded at 5.9980 against the US currency at 0850 GMT, its weakest since October. The currency touched 6.02 in overnight Asia-Pacific trade.
The High Election Board (YSK) is expected to announce its ruling on the appeals on Monday, AK Party’s mayoral candidate in the city said.
Markets have also been on edge due to Ankara’s push to buy Russian S-400 missile defense systems against NATO-ally Washington’s wishes, and also concerns over the central bank’s forex reserves, said Beste Naz Sullu, deputy manager at Gedik Investment.
“The main issue for the markets is whether Istanbul elections will be re-run or not. The dominant expectation in the market is that it will be repeated,” she said.
“Inflation, which has not receded fully, is among the risk factors as well,” Sullu added.
Inflation, a main concern among investors, declined more than expected to 19.5 percent in April, only slightly lower than in the previous two months, data showed on Friday.
Separately the central bank opened a lira-for-gold swap market, bankers said, adding that they expected transactions to begin on Tuesday after a bank holiday on Monday in London.
The central bank ramped up its use of swaps in March to fend off a volatile selloff in the Turkish lira, sparking concerns among investors that it was using the transactions to build up its forex reserves.
The main BIST100 share index was down 1.95 percent and the banking index was down 2.47 percent by 0849 GMT.
Last year’s currency crisis, fuelled in part by concerns over political pressure on monetary policy, helped tip the economy into recession.