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Turkish lira falls to a four-month low

File - A money changer counts Turkish lira bills at a currency exchange office in Istanbul January 24, 2014. REUTERS/Murad Sezer

ISTANBUL: Turkey’s lira fell to a four-month low as risk aversion over Ukraine was exacerbated by downgrade fears and government pressure for interest rate cuts, all just before Sunday’s presidential election.

Islamic lender Bank Asya bucked a fall in stocks, rising more than 4 percent, after Turkish Deputy Prime Minister Ali Babacan said state-run Ziraat Bank could buy it, saying that the government wanted state-owned banks to own Islamic lenders.

Babacan also said in a television interview that the treasury had not received any signal regarding a review of Turkey from ratings agency Moody’s due Friday.

Economy Minister Nihat Zeybekci triggered speculation about the review Tuesday when he said he had a “negative expectation” for it. Moody’s said it does not comment on potential rating actions.

Europe and U.S. [markets] are selling off the back of Russia concerns and that’s bringing down Turkey too,” said Erkan Dernek, market strategist at Odeabank. “Moreover, Moody’s speculation was the main reason for the sharp sell-off on top of the fall in global equities.”

Risk assets fell broadly after NATO said Moscow had amassed around 20,000 troops on Ukraine’s eastern border and warned that Russia could use the excuse of a humanitarian or peacekeeping mission to send troops into eastern Ukraine.

The Turkish lira weakened to 2.1632 against the dollar by 12:18 GMT, easing off a low of 2.1755 at which the currency was its weakest since March. It stood at 2.1463 late Tuesday.

 
A version of this article appeared in the print edition of The Daily Star on August 07, 2014, on page 5.

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Summary

Turkey's lira fell to a four-month low as risk aversion over Ukraine was exacerbated by downgrade fears and government pressure for interest rate cuts, all just before Sunday's presidential election.

Islamic lender Bank Asya bucked a fall in stocks, rising more than 4 percent, after Turkish Deputy Prime Minister Ali Babacan said state-run Ziraat Bank could buy it, saying that the government wanted state-owned banks to own Islamic lenders.

The Turkish lira weakened to 2.1632 against the dollar by 12:18 GMT, easing off a low of 2.1755 at which the currency was its weakest since March.


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