Turkey's currency nosedives on economic concerns, US dispute

Turkey's currency nosedives on economic concerns, US dispute

On the downside, a breach of 5.2202 (10-day SMA) would open the door to 5.0105 (21-day SMA) and finally 4.7305 (low Jul.23).

The Turkish lira has updated a record low against the USA dollar after a delegation from Ankara left Washington without a solution to a diplomatic conflict over the arrest of an American pastor in Turkey.

Both countries have imposed sanctions on senior ministers and the countries failed to make progess during talks this week.

Deepening investor concerns about Turkey's authoritarian trajectory under President Recep Tayyip Erdogan and the economic fallout have also weighed on the currency.

"If you have dollars, euros or gold under your pillow, go to banks to exchange them for Turkish lira".

Erdogan wants banks to lend cheap credit to fuel growth.

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Erdogan after winning Jun 24 elections with revamped powers tightened his control over the central bank and appointed his son-in-law Berat Albayrak to head a newly-empowered finance ministry. Erdogan said China, Mexico, Russia and India will be new markets for his country's exports.

The Turkish Lira is now under heavy pressure following comments by President Erdogan, lifting USD/TRY back to the area above 6.0 the figure.

That is spreading fear of an impact on other economies and markets - bank shares across the continent fell and the euro slipped to its lowest since July 2017 as the Financial Times quoted sources as saying the European Central Bank was concerned about European banks' exposure to Turkey.

"Investors have been looking at the unfolding currency crisis in Turkey as a local difficulty, however the accelerating speed of the declines appears to be raising concerns about European banks exposure to the Turkish banking system", said Michael Hewson, chief market analyst at CMC Markets UK.

The report said that the situation is not yet seen as "critical" but Spain's BBVA, Italy's UniCredit and France's BNP Paribas are regarded as particularly exposed.

He said: "If they have their dollar, we have the people, we have Allah".