ISTANBUL: Turkey's lira weakened 2% on Monday as local investors took advantage of a strong recent rally to build their forex and gold positions, and as new coronavirus restrictions began to weigh on the economy. Investors also positioned ahead of the Turkish Treasury's first domestic 10-year bond issuance in two years this week.
Analysts said some of the weakness was due to profit-taking after the currency rallied from a record low of 8.58 against the dollar earlier this month. President Tayyip Erdogan has in the last two weeks pledged a more market-friendly approach to the economy under a new central bank governor and finance minister.
The lira weakened as far as 7.8010 to the US currency from Friday's close of 7.65. It later trimmed losses to stand at 7.7650 at 0810 GMT. Last week, the central bank raised its policy rate by 475 basis points to 15% and pledged to remain tough on inflation, saying its move would reverse a harmful dollarisation trend and help rebuild depleted foreign reserves.
The thin FX buffer has exacerbated a broad drop in the lira this year and left the economy more vulnerable as activity contracted by nearly 10% in the second quarter, during the initial coronavirus wave. Net foreign investor inflows into stocks and bond markets were some $910 million in the week Nov. 9-13.
Comments
Comments are closed for this article.