Turkish lira tumbles through key level as Syria push begins

• The currency was on track for its weakest close since June.
• The lira has come under heavy pressure this week since the White House announced withdrawal of U.S. troops from the Syrian region.
• Traders said Turkish state banks had been selling dollars over the last three days to stop the lira from sliding beyond 5.85.

(Istanbul) Turkey's lira slid 0.5% on Wednesday, breaking through what traders called a key support level of 5.85 against the dollar, after President Tayyip Erdogan said a military operation targeting Kurdish fighters in northeast Syrian had begun.

Shortly afterward, at 1444 GMT, the lira traded at 5.8660, its weakest intraday level since August as worries grew about the fallout from the conflict and any reaction from Washington.

The currency was on track for its weakest close since June.

The lira, which closed on Tuesday at 5.8350, has come under heavy pressure this week since the White House announced U.S. troops would begin withdrawing from the Syrian region near Turkey's border.

Traders told Reuters that Turkish state banks had been selling dollars over the last three days to stop the lira from sliding beyond 5.85, a level it approached but did not breach on Monday, Tuesday and on Wednesday before Erdogan's announcement.

One trader estimated that the banks may have sold a total of $1 billion this week to support the lira.

"5.85 is the level," said another trader, before it was breached on Wednesday.

A currency crisis last year chopped some 30% off the value of the lira, which is down another 10.7% this year.

In the days before nationwide local elections on March 31, Turkey directed its state banks to withhold lira liquidity from London's overnight swap market, sources said at the time.

The Treasury could not be immediately reached for comment about any possible interventions.

Just days after U.S. troops pulled back from the area, Turkey on Wednesday launched air strikes and artillery hitting YPG militia positions around the border town of Ras al Ain.

The lira weakened as far as 5.8465 on Tuesday before closing slightly stronger. On Monday it again approached 5.85, weakening as far as 5.8440.

The currency has been pulled in both directions this week by comments from U.S. President Donald Trump.

A day after warning he could "obliterate" Turkey's economy if it went too far in its Syria operation, Trump tweeted on Tuesday that Ankara was a "big trading partner" of the United States and had been "good to deal with".

The extensive area of Ankara's planned incursion into Syria could lead to months of military activity that raises concern in the markets, dealers say.

Tensions between the United States and Turkey have been simmering in recent months over issues including Ankara's purchase of Russian missile defence systems and disagreements over policy in Syria.