The Turkish lira fell against the US dollar on Wednesday, amid concerns about the independence of the central bank and in conjunction with the anticipation of foreign exchange reserves figures.
Turkish President Recep Tayyip Erdogan repeatedly attempted to intervene in the central bank’s policy by calling for the reduction of interest rates. Capital controls aren’t a choice for Turkey, however, the country has reintroduced a tax on foreign-currency exchange markets for purchases of more than $100,000.
“I can’t see any significant flows returning until policymakers become more market-friendly. Turkey has already shown that it doesn’t care if real money can’t hedge properly,” said Win Thin, global head of currency strategy at Brown Brothers Harriman.
Turkey’s foreign reserves soared in the week ending May 10, yet, investors are anticipating new figures, which is to be released on Thursday.
Data showed yesterday that consumer confidence in the Turkish economy reached an all-time low this month.
Meanwhile, the lira depreciated against the greenback by about 0.9 percent, at 6.1039 per dollar.
Since the beginning of this year, the lira dropped 13.35 percent against the US currency, the lowest level in 8 months.