The Turkish lira plunged to historic lows today against the US dollar as markets took fright following the government’s arrest of pro-Kurdish members of parliament and the a bomb blast in the southeast of the country.
The lira is now trading at values substantially lower than in the wake of the 15 July coup attempt aimed at unseating President Recep Tayyip Erdogan which also rattled markets.
The detention of a dozen MPs from the pro-Kurdish Peoples’ Democratic Party (HDP) overnight put immediate early pressure on the currency and the news its co-leaders Selhattin Demirtas and Figen Yuksekdag had been jailed by a court extended its losses.
The lira was trading at 3.17 to the dollar, a new historic low and a loss in value of 1.8 per cent on the day. Its lowest value in the wake of the coup was 3.09 lira to the dollar.
Analysts said that the move to detain a dozen MPs from the HDP, including the two co-leaders, had added to fears about political turbulence.
“The currency and other Turkish lira denominated assets are likely to remain pressurised due to heightened tension,” said Gokce Celik, chief economist at QNB Finansbank Research in a note to clients.
Ozgur Altug, chief economist at BGC Partners in Istanbul, said the lira had been depreciating in the last months “pretty much without any break” and the next technical ceiling for the currency was at 3.2 lira to the dollar.
“Psychologically, we are in uncharted territory right now. Therefore, it is hard to guess where and when the bleeding in the Turkish lira will stop,” he said.
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