Wednesday 6 July 2022 - 15:06

Turkey’s Lira Dips for Seventh Day As Policy Concerns Revive

Story Code : 1003105
Turkey’s Lira Dips for Seventh Day As Policy Concerns Revive
The lira TRYTOM=D3 weakened as much as 0.9% against the U.S. currency to hit 17.1810, further erasing a rally which briefly took the currency to 16.03 on Monday last week.

It has lost 23% of its value this year, on top of a 44% slump last year which was triggered by a series of central bank interest rate cuts encouraged by President Tayyip Erdogan despite rising inflation, which neared 79% in June.

Markets were also assessing the impact on energy importer Turkey of Tuesday's near-10% slide in crude prices. Economists calculate that a $10 move in the Brent oil price amounts to a change of $4.5 billion-6 billion in Turkey's annual energy import bill, which stood at $50 billion last year.

The high energy bill undermines the government's aim to rein in a chronic high current account deficit and achieve a surplus. According to a Reuters poll, the deficit this year is expected to exceed $40 billion.

The lira strengthened just under two weeks ago after the latest move to underpin the currency, with the banking watchdog restricting access to lira loans for companies with substantial forex cash assets. Those gains have gradually been eroded since Tuesday last week.