The Turkish lira on Friday morning, August 10, fell by almost a 13% to the historical low – less than six lire per dollar, but then rebounded to 5.9 liras per dollar. Back in April the dollar was traded for four lira.
The night before, Turkish President Recep Tayyip Erdogan said that such hesitation should not bother the people.
“Different campaigns are conducted against us – do not pay attention to them. Do not forget: with them the dollar, and with us – our people and our God,” media quoted Erdogan’s statement.
The immediate reason for the collapse of the lira was the failure of the mission of the Turkish delegation, who visited the US in connection with the case of the American pastor Andrew Brunson. Brunson was arrested last year on charges of complicity with the Kurdistan Workers’ Party and FETO (both banned in Turkey). Ankara considers the latter was the organizer of the coup attempt in 2016.
In addition, the Financial Times wrote about the growing concern of the ECB about the stability of European banks with ties to Turkey. Also, investors are concerned about the growing inflation and possible loss of independence of the Central Bank of Turkey, which is in no hurry to adjust rates.
In early August, the US Treasury Department slapped sanctions against the Minister of Justice and the Interior Minister of Turkey in connection with the Branson case. In the spring, US President Donald Trump pledged “massive sanctions” against Turkey in connection with this case.