Turkish lira price on August 16 rallies against dollar after $15 billion Qatar loan

Turkish
President Tayyip Erdogan.
REUTERS/Umit
Bektas/File Photo

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The
Turkish lira continued to retreat from its historic low
against the dollar on Thursday after Qatar announced a $15
billion funding package for Turkey’s wobbling economy.

The
dollar is down 2.5% against the lira to 5.8052 at 8.12 a.m.
BST (3.12 a.m. ET) on Thursday morning. It follows a surge over
the last week and a half that saw the dollar climb to over 7 lira
at its worst.

The latest strengthening of Turkey’s currency comes after Qatar
announced a $15 billion funding package for Turkey late on
Wednesday evening.

Tamim bin Hamad Al Thani, the Amir of Qatar, tweeted:
“Today, in the framework of important negotiations with His
Excellency President Erdogan in Ankara, we announced a package of
deposits and investment projects worth $15 billion in this
country, which has a productive, strong and robust economy.”

Turkish President Tayyip Erdogan tweeted: “On behalf of the
Turkish people, I sincerely thank Sheikh Tamim and the Qatari
people for standing by Turkey. There is no doubt that our strong
relations with the friendly and brotherly state of Qatar will
continue to evolve in many areas.”

Turkey’s currency has come under pressure due to rising
diplomatic tensions and cooling trade relations with the US,
Erdogan’s perceived control over the country’s central bank, and
a strong US dollar. Erdogan has accused the US of waging an
economic “war” against the country.

The lira pressure began to ease on Monday when the Turkish
central bank
promised it would take “all necessary measures” to protect the
economy. Turkey’s banking watchdog on Wednesday also
moved to crack down on shorting of the lira.

Hussein Sayed, the chief market strategist at FXTM, said in an
email on Thursday: “Such measures may only provide short-term
relief and policymakers need to address the longer-term
challenges that will face the country.

“With inflation expected to skyrocket in the coming months, a
current account deficit that exceeds $50 billion and more than
$16 billion of debt maturing in 2019, investors fear that the
currency crisis will turn into a debt crisis.

“Even if tensions between the US and Turkey are resolved,
investors still need to see serious fiscal and monetary measures
to restore confidence.”