Turkish lira weakens 1pc after inflation rise

ISTANBUL: Turkey's lira lost ground against the dollar on Wednesday, giving up some gains made in a recovery from May's all-time low, after data showed a higher-than-expected rise in inflation last month.

The lira has lost some 12pc of its value this year due to the impact of the coronavirus crisis and amid concerns over Turkey's depleted currency reserves and foreign financing needs.

The lira weakened as much as 1pc to 6.77 against the US currency and stood at 6.7630 at 1335 GMT. Last month, the currency hit 7.2690, its weakest on record.

Turkish annual inflation jumped to 11.39pc in May as a weaker lira made imports more expensive, an impact that outweighed any drop in domestic price pressures from a sharply slowing economy.

The central bank, which has cut benchmark borrowing costs at its last nine policy meetings, has said it expects a recent downtrend in inflation to resume, clearing the way for more interest rate cuts.

Real interest rates have been in negative territory for lira depositors since late last year.