The ongoing economic slowdown and rising security risks continue to cause uncertainty for the Turkish Lira, paving the way for a -25.00% decline versus the US dollar over the last 52-weeks alone. The situation in Turkey with Islamic State and the Kurdish Separatists have raised concerns about political stability.
Amid the uncertainty, political officials are debating whether to expand powers of President Erdogan, which could further muddy the outlook for the economy going forward as the Central Bank runs into resistance when it comes to raising rates to fight inflation and the decline in the local currency.
After the Central Bank lowered the lowering reserve ratio requirements for financial institutions the Lira losses moderated slightly. However, Tuesday’s selloff has extended into Wednesday’s session with the USDTRY pair reaching back towards the previous session’s highs.