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Wednesday, March 22, 2023

Turkish lira weakens for 8th day beyond 15.6 vs dollar

EconomyTurkish lira weakens for 8th day beyond 15.6 vs dollar

Ankara (The Times Groupe)- The Turkish lira slid 1% to beyond 15.65 against the US dollar on Monday, slipping towards the record-low levels it reached in December following a series of interest rate cuts, while a key measure of risk spiked to a record high.

After falling as far as 15.6605 by 1235 GMT, the currency edged back to 15.595 at 1245 GMT. This year, it has lost 16% of its value against the U.S. currency after losing 44% in 2021.

In March, the conflict in Ukraine began to weigh on the lira as Western sanctions on Russia sent energy prices soaring, increasing Turkey’s already hefty import bill.

Turkey’s current account deficit in March increased to $5.554 billion, central bank data showed on Monday, exceeding the $5.371 billion forecast by Reuters.

In Turkey, 5-year credit default swaps (CDS), the cost of insuring against default, reached a record high of 718 basis points on Monday, up 8 points from Friday’s close, according to IHS Markit data.

Turkey’s sovereign hard-currency debt premium over US Treasuries rose 7 basis points to 607 basis points – the widest since mid-March, JPMorgan’s EMBI Global Diversified index showed.

Reuters reported that five traders expected the exchange rate to range between 15.5 and 16.0 going forward and that they would watch whether authorities defend the level of 16.0 against the dollar.

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