ISTANBUL: The Turkish lira traded near its one-week low on Monday, weighed down by political uncertainty after last week's presidential election and tension between Russia and Ukraine.
Moody's said in a statement on Friday the presidential election was unlikely to resolve Turkey's key economic and institutional credit challenges. Political uncertainty would persist until a parliamentary election due by June 2015.
Turkish Economy Minister Zihat Zeybekci in a statement on Monday that Moody's comments showed the rating agency had disregarded Turkey's political stability and its economic results over the past 12 years.
"We don't take Moody's comment into consideration as these comments were prepared with prejudice instead of being prepared with economic criteria and they do not overlap with the current economic state," Zeybekci said.
Investors are waiting for Turkish president-elect Tayyip Erdogan's announcement of his new prime minister this Thursday following a meeting of his ruling AK Party's senior leadership.
"Aside from the prime minister, markets will also closely follow whether their two favourite cabinet ministers, Ali Babacan and Mehmet Simsek, will retain their posts in the new cabinet," Finansbank economist Deniz Cicek said in a note.
Reports late on Friday that Ukrainian forces had destroyed a Russian military column in Ukrainian territory initially hit markets.
Risk appetite was subdued as the four-month conflict reached a critical phase over the weekend. Kiev and Western governments were watching to see if Russia would intervene to support besieged rebels in eastern Ukraine, but such immediate fears appeared to have subsided somewhat.
The lira was trading at 2.1677 by 1246 GMT, compared with its one-week low of 2.1718 late on Friday.
Istanbul's main share index was trading 0.42 percent higher at 77,017.99 points, slightly outperforming the broader emerging markets index, which was up 0.1 percent.
The benchmark two-year government bond yield was unchanged at 9.36 percent.
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