Turkish lira weakens to record low of 18.84 against dollar, with losses near 30 pct

Turkey’s lira briefly touched a record low of 18.8440 against the dollar early on Monday during low liquidity hours, bringing its losses this year to 30%, after a period in which Ankara has followed policies tightly controlling the exchange rate.

The lira subsequently recovered its losses and stood at 18.6900 at 1044 GMT, slightly weaker than Friday’s close of 18.6850. The currency shed 44% of its value in 2021, mainly as a result of unorthodox rate cuts as inflation rose.

The currency has become less reactive to policy decisions due to a scheme that protects lira deposits against forex depreciation, Ankara’s indirect foreign exchange sales to the market, and a heavy hand in directing credit in the economy.

The lira has remained relatively stable since August despite another easing cycle this year that saw the policy rate reduced by 500 basis points to 9% despite inflation near 85%.