Turkish Lira Continues Record Slide as New Economic Team Adopts Hands-Off Approach
Shafaq News/ The Turkish lira is on track to register the longest streak of weekly losses in the current century as the new Turkish economic team adopts a limited intervention approach in the foreign exchange market.
The currency experienced an additional 1% decline this week, following an 11% loss in the previous week, extending its continuous decline since early March. This marks the most extended series of losses for the lira since 1999.
The lira's decline gained momentum after President Recep Tayyip Erdogan's re-election on May 28. Leading up to the election, the central bank had utilized approximately $200 billion in reserves over 18 months to support the lira. Despite these efforts, the lira remains one of the worst-performing emerging-market currencies.
In a potential shift away from heavy state intervention, Erdogan appointed two former central US bankers, Mehmet Şimşek and Hafiza Ghaya Erkan, to oversee the country's finances. This move signals a willingness to let market forces determine the fair value of the currency.
Foreign investors are closely watching the lira for signs of stabilization as expectations grow regarding increased capital flows into Turkish bonds and stocks. Recent data from the central bank revealed that foreign investors purchased Turkish bonds and stocks worth $287 million last week, marking the most significant inflow since December.
The market will continue to monitor the developments in Turkey's economic policies and the lira's performance as investors seek a balance point and assess the potential opportunities in the country's financial markets.
