Lira surges on hopes Turkey to release detained American pastor

Emre
Tazegul/AP

Turkey’s currency rallied Monday amid reports the country could
release an American whose controversial imprisonment has been at
the center of an ongoing feud between Ankara and
Washington. 

The lira was up more than 3.5% to 6.1279 against the dollar after
the
Wall Street Journal reported a Turkish court could
release 50-year-old Andrew Brunson at an October hearing —
if the US turns down pressure to do so. The evangelical pastor
was arrested in 2016 for allegedly aiding terrorist groups,
charges he denies. 

The case has fueled both diplomatic and economic rifts between
the US and Turkey. In August, the Trump administration doubled
existing tariff rates on Turkish aluminum and steel after the
NATO allies failed to make progress on negotiations for Brunson’s
release.

Earlier that month, it had imposed sanctions on Turkey’s minister
of justice and minister of interior, whom the White House said
played “leading roles” in the arrest and detention of Brunson.

Conflicts between Turkey’s central bank and government have also
put pressure on the lira, one of the worst-performing currencies
this year. 

Turkey’s central bank raised its key rate by 625 basis
points to 24% in early
September, despite backlash from President
Recep Tayyip Erdogan. The president backs unorthodox
policies like cutting rates amid accelerating
inflation and has increasingly tried to wield
influence over monetary policy since his reelection this year.

“October will be a key month on the geopolitical front, and
potentially positive headlines could trigger larger swings in
USDTRY and TRY assets in general,” Citi analysts led by Dirk
Willer wrote in a note. 

MI