Turkish lira hits weakest level against dollar

Turkey's lira declined some 0.6% against the dollar on Monday to its weakest in almost two months, on concerns over ties with the United States and expectations of further central bank rate cuts.

The lira traded at 5.8455 against the dollar at 0849 GMT, weakening some 0.6% from Friday's close of 5.8120. Earlier, it reached 5.8505, its weakest level since Oct. 22.

The currency has declined more than 9% this year mainly over concerns over deteriorating ties between Ankara and Washington, caused by policy differences in Syria and Turkey's purchase of the Russian S-400 missile defence system.

A US Senate committee backed legislation last week calling for sanctions on Ankara over its purchase of the S-400s and its offensive in Syria. Turkish President Tayyip Erdogan on Sunday said Turkey could consider shutting down Incirlik air base in response to the potential US sanctions.

"The Turkish currency is the weakest emerging market currency at the beginning of trading this week," said Piotr Matys, an EM forex strategist at Rabobank. "The main reason is that diplomatic tensions between the United States and Turkey could escalate. Erdogan's comments are an explicit warning that unsettled investors."

Turkey's jobless rate edged down to 13.8% in August-October period which suggested jobs remain elusive despite the economy having emerged from recession. Turkey's bluechip Borsa Istanbul index traded almost flat, while the banking index declined some 0.45%.