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Turkish Lira Has the Monday Blues; Falls 4% on US-Turkey Diplomatic Row

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The Turkish lira weakened on Monday morning by as much as 4.2% against the dollar after Sunday’s decision by the Turkish government to immediately suspend all non-immigrant visa services at Turkish consulates and embassies in the US.

Turkey’s tit-for-tat decision came just hours after the US announced the same thing.

Washington said on Sunday that it would be suspending all non-immigrant visa services to Turks in light of “recent events,” which have forced the Trump administration to “reassess the commitment” of Turkey to the security of US diplomatic offices and personnel within its borders.

The diplomatic row follows last week’s arrest of a US consulate employee in Istanbul for alleged links to religious leader Fethullah Gulen – the man that President Erdogan blames for a failed coup attempt in July 2016.

In what appears to be an attempt to mock or irritate the US, in its own statement, Turkey repeated word-for-word much of what the US had said, including references to “recent events” and Turkey’s need to “reassess the commitment” of the US to the security of its diplomatic facilities.

Unnerved by these developments, traders rushed to sell the lira in the first two hours of trading on Monday, which pushed USD/TRY as high as 3.7716 at one stage, from Friday’s close of 3.6119. A period of calm followed and the lira managed to make back some of its lost ground. By 03:30 GMT, USD/TRY was back in the mid-3.71s; still nearly 3% weaker than its value on Friday.turkish-embassy

Monday’s movements put the lira down 9% against the dollar in the last four weeks and down 4.8% this year.

The lira remains at historically weak levels, which is stating the obvious for a currency that has lost 64% of its value against USD since a redenomination in 2005, and 99% of its value since the mid-1990s (ignoring the redenomination).

Potential investors continue to be frightened away from the lira and ownership of Turkish assets in general by inflation, which remains stuck in double figures. Consumer prices in Turkey rose 11.2% in the year to September according to official data.

Given the lira’s history, foreign exchange traders will be expecting an attack on the major 4.0 handle in USD/TRY sometime in 2018. USD/TRY’s post-redenomination high (lira low) came in January this year at 3.7812.

 

Readers in need of Turkish lira can save big on exchange rates by using BER’s comparison calculators for TRY foreign currency transfers and TRY travel cash.

Consider that with today’s best value FX provider, a transfer of EUR 20,000 to a Turkish bank account would return TRY 85,642, and that’s TRY 3,300 more than would be given by a retail bank or Bureau de Change (today’s bank average: TRY 82,301).

Joel Wright Author: Joel Wright

Joel has been involved in the markets for the past 10 years. During that time he’s worked in market analysis teams in London, in the financial technology sector in Singapore – working mostly with automated trading tools and algorithms – and most recently he’s been planning FX risk hedging for an SME in Bangkok. Joel has a first-class honours degree in Financial Services and currently writes about foreign exchange for several global businesses.

You can get in touch with Joel via email here or via the contact page.
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product. Full Disclaimer

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