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article imageTurkish lira hits new historic lows after Kurdish party crackdown

By AFP     Nov 4, 2016 in Business

Turkey's embattled lira on Friday plunged to new historic lows in value against the US dollar as markets took fright at a new crackdown against its main pro-Kurdish political party.

The lira is now trading at values substantially lower than in the wake of the July 15 coup 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 percent on the day. Its lowest value in the wake of the coup was 3.09 lira to the dollar.

The Turkish stock market also tumbled, with the Borsa Istanbul 100 Index shedding 3.15 percent to 74,267 points.

The lira has been under sustained pressure over the last weeks amid doubts over Turkey's flagging growth prospects and fears the drive by Erdogan for a presidential system will risk more instability.

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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