Wednesday, October 27

Turkish lira briefly touches new record low

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ISTANBUL — The Turkish lira weakened to a record low against the dollar on Friday, hit by concerns over the credibility of monetary policy as well as underlying strength in the dollar.

The lira stood at 8.93 at 1013 GMT, recovering some of its losses from a new all-time low of 8.9750 it hit earlier but still 0.5% weaker than a close of 8.8800 on Thursday. The currency has weakened 16% to the dollar this year .

Bankers said the lira weakness was due in part to a Reuters report citing sources who said President Tayyip Erdogan was losing confidence in the central bank governor on monetary policy direction. The US currency has also been strengthening with rising US bond yields.

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Erdogan’s communications director Fahrettin Altun said on Twitter that the Reuters report was “fake news” without elaborating, driving some of the recovery in lira, traders said.

The US dollar index rose marginally to 94.291, not too far from a 12-month high of 94.504 hit in late September. Traders are also awaiting US payroll data for September.

Last month Turkey’s central bank unexpectedly cut its policy rate by 100 basis points to 18%, which analysts said was further evidence of political interference by Erdogan, a self-described enemy of interest rates.

Data since the rate cut showed annual inflation hit a two-and-a-half year high of 19.58% in September. (Writing by Ezgi Erkoyun and Daren Butler; Editing by Dominic Evans and Toby Chopra)

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