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The Turkish lira touched a new record low in early Asian trade after its free fall in the previous session.
On Monday, the lira last traded down by almost 9 percent against the greenback at around 6.999 at 9:05 a.m. HK/SIN. It had earlier dropped to a fresh all-time low of 7.24, before paring some losses after the Turkish government moved to assuage market nerves frayed by the currency’s recent fall.
Finance Minister Berat Albayrak said in a Sunday interview with Ming local media outlet Hurriyet that the government had a plan in place following the fall in the lira, Reuters reported. Albayrak said Turkish institutions will take “necessary steps” beginning Monday, but Reuters said few specifics were provided on what those steps included.
The lira briefly plunged 20 percent against the dollar on Friday, finishing the U.S. session lower by some 16 percent after U.S. President Donald Trump said he had approved metals tariffs on Turkey to be doubled.
The weakness in the lira came against the backdrop of the Turkish economy facing major challenges, but it has come under pressure most recently after U.S.-Turkey talks over the detention of a U.S. pastor in Turkey appeared to make no major progress.
“The decline in the lira is multifaceted, caused not only by a weak external position in terms of current account deficit and inadequate currency reserves, but also the challenging political environment which exacerbates the vulnerabilities in the lira,” Kerry Craig, global market strategist at J.P. Morgan Asset Management, wrote in a recent note.
After calling for citizens to convert out of dollars and gold and buy the lira to help fight a “national struggle” last week, Turkish President Recep Erdogan said Sunday that the drop in the currency was not an accurate reflection of the country’s fundamentals, Reuters said.
“There is no economic reason … This is called carrying out an operation against Turkey,” Erdogan said, based on a translation.
— CNBC’s David Reid contributed to this report.