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TEHRAN, May 23 - Turkey's embattled lira on Wednesday lost over three percent in value to hit new historic lows against the US dollar, but there was no word from the central bank of any emergency action to buttress the currency.
TEHRAN, Young Journalists Club (YJC) - Following sharp losses on Tuesday, the lira continued to underperform all other emerging market currencies, after suffering a hammering in Asian trade overnight when Japanese investors sold Turkish assets.
It lost 3.3 percent against the dollar to trade at 4.82, only slightly paring losses after earlier for the first time ever testing the 5.0 ceiling by hitting 4.92 lira to the dollar.
Over the last month alone, the lira has lost over 18 percent in value against the dollar as fears grow over the health of the Turkish economy which is dogged by double-digit inflation despite high growth.
Its performance has been even worse than the Argentine peso which has also suffered severe turbulence over the last month.
The sharp fall in the currency's value has come at a hugely sensitive time as Turkey heads to June 24 presidential and parliamentary elections where President Recep Tayyip Erdogan is seeking a new mandate and a thumping parliamentary majority.
The next meeting of Turkey's central bank is not due until June 7 but economists believe an emergency -- and substantial -- rate hike by the central bank is not only on the cards, but essential.
"It seems highly likely that they'll take action," said William Jackson, emerging markets economist at Capital Economics in London, saying the bank needed to raise rates by 200-300 basis points to provide some support to the lira.
He told AFP the sell-off in the lira over the past few weeks has been even more severe than that which preceded the emergency hike by the bank in early 2014.
The bank and its chairman Murat Cetinkaya have been silent since May 16 when it issued a statement promising "necessary steps" to stabilise the currency.
Yet amid a growing clamour for action and the situation becoming more extreme, there was no new hint from the bank within market hours Wednesday.
"Since then (May 16) there has been a definite sound of silence in the forex market," said Inan Demir at Nomura International.
Source: AFP
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