ISTANBUL: The Turkish lira fell to its weakest since Jan. 29 on Monday, underperforming emerging market peers after a weekend raid by police on media outlets close to an opponent of President Tayyip Erdogan.
The lira was at 2.3120 to the dollar by 0916 GMT, easing from 2.3015 late on Friday, as fears of political tension inflamed underlying concerns about Turkey's large current account deficit. The 10-year benchmark bond yield inched up to 8.7 percent from 8.67 at Friday's close.
Sunday's raids marked an escalation in Erdogan's battle with U.S.-based cleric Fethullah Gulen, with whom he has been in open conflict since a graft investigation targeting Erdogan's inner circle emerged a year ago.
"This could prove to be a key market test for Turkey, coming at a particularly difficult time for emerging markets as they try to cope with the sharp adjustment in oil prices, and the prospect of Fed tightening, eventually, in 2015," said Timothy Ash, head of emerging market research for Standard Bank.
Improving U.S. economic data has added to bets that the Fed is moving closer to raising interest rates next year. Turkey would be vulnerable to a U.S. rate hike which would attract hot money away from its assets and increase the cost of financing its deficit.
Turkey's main stock index was down 0.59 percent, slightly lagging the emerging market index which was down 0.44 percent.
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