Turkish lire falls to record low
Tensions with the West and concern over central control of monetary policy could prove boon to holidaymakers
Growing tensions with the west and concern over central control of monetary policy has seen the Turkish lire tumble to a record low against the dollar, in a possible boon to holidaymakers.
It follows news the Trump administration is to review Turkey’s duty-free access to the US market, a move that could affect some $1.66 billion (£1.28 billion) of Turkish exports.
Fears of retaliatory trade tariffs have exacerbated the sell-off in the lire which has lost 27% of its value this year alone.
The currency has been on the downward slide for months as relations with the West have steadily worsened and amid growing concern about President Recep Tayyip Erdogan's drive for greater control over monetary policy.
The Financial Times reports that in his push to keep Turkey’s economy growing, “the president has repeatedly demanded that the bank keep credit cheap, even with inflation stuck in the double digits since the start of the year”.
In a speech on Friday, Erdogan said Turkey was “face to face with an economic war”. He added: “Do not fear, we will emerge victorious”, urging Turks to cash in their under-the-mattress gold, euros and dollars to bolster the currency and “show their resistance to the world”.
“The best bet now is to expect further weakness in the lira” Per Hammarlund, chief emerging markets strategist at SEB, told Reuters.
“They should be doing more to support the lira, but in my view this will continue for a while longer and the lira will take another beating here” he added.
However, the record low lire could prove good news for travellers journeying to the country this summer, with foreign currencies stretching much further than previous years.