ISTANBUL: Turkey’s lira fell to consecutive all-time lows against the dollar yesterday, hit by a corruption scandal that has spiralled into a crisis for the ruling elite and the judiciary.
The lira tanked to 2.1410 per dollar, weakening from 2.0850 late on Wednesday. Stocks and government bonds also fell, extending losses after a public prosecutor working on the graft probe said the judiciary was subject to ‘open pressure’ in an unusally outspoken statement. The lira stood at 2.1270 by 1633 GMT.
A corruption investigation has widened to include the sons of three of Prime Minister Recep Tayyip Erdogan’s ministers and prompted him to sack half of his cabinet, appointing loyalists in an attempt to tighten his grip over the executive.
The local financial community and foreign investors have generally seen Erdogan as a known quantity who has supported a decade of growth and broadly liberal economic policy.
The lira is particularly vulnerable because Turkey is among the countries most exposed to the US Federal Reserve’s decision this month to stem a flood of dollars, reversing an investor rush into emerging stocks and bonds.
On Tuesday, the central bank said it was increasing the scale of the regular hard currency auctions it runs in support of the lira, signalling sales worth at least $6bn by the end of January.
Turkey has seen explosive consumption-led growth under Erdogan, with per capita wealth almost tripling in nominal terms over the past decade.
Reuters
