On Sunday, in early Asia-Pacific trading hours, the Turkish Lira, which had tumbled nearly 24 per cent this year, had fallen 1.6 per cent to an all-time low against its American peer as the Turk President Tayyip Erdogan had ordered the country’s Foreign Ministry on Saturday to expel ambassadors of the United States alongside nine other western nations, opening up the deepest rift ever between Turkey and the West in Erdogan’s 19 years in power.
In point of fact, the Turkish Lira pummelled to an all-time low last week as well after the Turk Central Bank had slashed its benchmark borrowing cost by 200 bps (basis percentage point) despite a soaring inflation, a dubious move which had baffled analysts across the globe and driven opposition lawmakers to brand the action as outlandish and reckless.
Nevertheless, Turk President Erdogan’s latest remarks came forth just days after ambassadors of the United States alongside nine western countries, seven of which are Turk’s NATO allies, had requested the release of a so-called philanthropist Osman Kavala, who has been in prison for more than four years over accusations of financing social unrest back in the 2013s alongside staging a coup in 2016.
Turkish Lira hits all-time low as Erdogan expels envoys
Citing statistics, as of Sunday evening, Turkish Lira had dipped to a record low of 9.75 against its American counterpart, while at least two Central Bankers had laid the blames on Erdogan’s latest comment on condition of anonymity.
Meanwhile, adding that the Turkish currency would more likely to face off a tremendous scale of pressure on Monday, a veteran emerging market analyst, Tim Ash at BlueBay said, “I worry ... for Turkish financial markets on Monday.
The lira will inevitably come under extreme selling pressure. And we all know that (Central Bank Governor Sahap) Kavcioglu has no mandate to hike rates, so the only defence will be spending foreign exchange reserves the CBRT does not have. ”