Turkish lira plunges 3.5% amid ongoing feud between Washington and Ankara

President
Donald Trump, accompanied by Turkish President Recep Tayyip
Erdogan.
Evan
Vucci/AP

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Turkey’s
currency fell sharply Monday as the country resumed trading
after a weeklong holiday.

The lira dropped 3.5% to 6.2964 against the dollar around 8:45
a.m. ET. The currency has shed nearly a third of its value this
month, breaching 7 per dollar to a fresh all-time low last week.

The lira had already been under significant
pressure following the June reelection of President Recep
Tayyip Erdogan, who is a proponent of unorthodox policies
like cutting borrowing costs amid accelerating inflation.

As a rift between Turkey and the US widens, that selloff has
accelerated. President Donald Trump
doubled existing tariff rates on Turkish aluminum
to 20% and on Turkish steel to 50% earlier this month
after the two countries failed to make progress on a conflict
over the imprisonment of Andrew Brunson, an evangelical pastor
who has been detained in Turkey for nearly two years.

The Trump administration also imposed sanctions earlier this
month on Turkey’s minister of justice and minister of interior,
whom the White House said played “leading roles” in the arrest
and detention of 50-year-old Brunson. He was arrested in Izmir in
2016 for allegedly aiding a failed military coup, accusations the
pastor denies.

Jameel Ahmad, head of currency strategy and market research at
FXTM, said fears of a widening current account deficit and an
expected jump in inflationary pressures are also leaving
investors on edge. 

“I personally expect the lira to remain under pressure for some
time as the same structural concerns that terrified traders away
from Turkish assets still remain unchanged,” Ahmad said. 

Markets Insider