ISTANBUL: The Turkish lira hit a new record low Thursday after the central bank failed to reassure investors on its strategy to defend a currency battered by concerns over the withdrawal of U.S. monetary stimulus and turmoil in the Middle East.
Economy Minister Zafer Caglayan added to pressure on the lira by criticizing the central bank for intervening, saying its forex sales had failed to have any material impact and that the bank should not raise its policy rate.
Turkey is one of the high-profile sufferers from a withdrawal in capital from emerging recently due to the prospect of the U.S. Federal Reserve reining in its huge program of dollar printing.
The lira hit a record 2.0840 against the dollar in morning trade, later recovering slightly to 2.0760 from 2.0606 late Wednesday. It was also near record lows against the dollar/euro basket at 2.3999. The central bank has sold a total of $8 billion so far this year at forex auctions.
In a closed meeting with economists Wednesday, central bank officials hinted at more unorthodox tweaks in its monetary policy, including using gross forex reserves to manage liquidity and support the currency. But the meeting did little to reassure nervous investors. The lira hit a record low Aug. 28, after the bank’s Governor Erdem Basci ruled out interest rate hikes to defend the currency.