Turkish lira weakens to record low as dollar strengthens

PanARMENIAN.Net - The U.S. dollar reached a new record high against the Turkish lira on Friday, October 28 amid security risks surrounding Turkey and expectations of an interest rate hike by the U.S. Federal Reserve, Daily Sabah reports.

The currency of the world's largest economy has strengthened considerably recently with the U.S. dollar index, which measures strength of six major currencies against the dollar, hitting a high of 98.50 points in the last eight months.

The dollar broke its previous record at 3.1055 on Oct. 13, amid debates about taking the ruling Justice and Development Party's (AK Party) proposal of a presidential system to a referendum.

Following the dollar's rally, the Central Bank of the Republic of Turkey (CBRT) left the upper band of the interest rate corridor (marginal funding rate) unchanged for the first time in seven months at 8.25 percent at the Monetary Policy Board (PPK) meeting on Oct. 20.

Following the CBRT's decision, the rate had a downward trend.

The Turkish lira slipped to a historic low against the U.S. dollar Friday as anticipation of a rate hike from the Federal Reserve saw the American currency appreciate across the globe.

The Turkish lira dipped to 3.1270 against the U.S. dollar at 8:30 a.m. GMT.

Analysts believe the drop was largely due to the rising geopolitical tension in the region, especially in Iraq and Syria, besides the surging likelihood of a rate hike from the U.S. Federal Reserve, which would limit the capital flow to emerging economies such as Turkey.

Speaking on the issue, Economy Minister Nihat Zeybekci said Turkey does not need to worry about the value loss. Zeybekci noted that besides the extreme fluctuations, they observe the developments as normal and the level that the markets will determine in its own equilibrium is the acceptable level for the exchange rate.