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Lira fell by 2%, and on Monday it could collapse altogether if the United States recognizes the Armenian genocide on Saturday

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The Turkish lira fell 2% Thursday to its lowest level this month as traders sold ahead of a three-day weekend when relations with the US could be under strain, and after President Tayyip Erdogan again defended costly past selling policies. foreign currency.

The lira hit 8.357 against the dollar, its steepest fall this month, despite the US currency sagging. This was one of the worst performance in emerging markets.

Sources said the focus was on Ankara’s often escalating relationship with Washington, as US President Joe Biden was expected to officially recognize the massacre of Armenians by the Ottoman Empire during World War I as an act of genocide.

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The move, expected on Saturday in the middle of a long holiday weekend in Turkey, is likely to infuriate Ankara and damage ties between NATO allies.

The banker, who asked not to be named, called it “risk mitigation in the face of a potentially adverse political news stream.”

One forex trader said that relations with the US “could become more tense in the near future.” According to the trader, Erdogan added to investors’ concerns after his comment that more foreign exchange reserves could be sold if necessary.

Erdogan’s government faced opposition pressure to justify $ 128 billion in foreign exchange sales in 2019-20, which severely depleted the central bank’s reserves. On Wednesday, the president said the political campaign was based on lies and offered the opportunity to reopen such unorthodox sales.

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Commerzbank said the recent depreciation of the lira was significant for the Turkish economy given its impact on inflation.


“The carryover of the devaluation of the exchange rate is an important element of high inflation in Turkey, and any seemingly harmless step can trigger a market spiral and complicate the situation,” the statement said.


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