The Turkish lira weakened 0.8% on Monday as investor unease about the conflict in neighbouring Syria was amplified by a global flight to safe havens in the face of the coronavirus spread.
The lira stood at 6.1535 against the dollar at 0955 GMT, weakening from a close of 6.1045 on Friday and hitting its weakest level in regular trade since last May.
The Turkish currency has fallen more than 3% this year, in addition to losing 36% over the last two years in a slide triggered by a currency crisis in 2018.
"We are seeing the global flight from risk reflected in the lira," said a treasury desk trader at one bank, pointing to the dollar, US Treasuries and gold all benefiting from their safe haven status as the coronavirus spreads.
On the coronavirus issue, the large spike in Italian cases has especially rattled investors on concerns about the potential for the virus to spread deeper into Europe and cause economic disruption there.
The yield on the benchmark 10-year bond rose to 12.26% on Monday from 12.05% on Friday. It had recently fallen below 10% from a level of 21% last May.
The main BIST 100 share index fell 2.4%, led lower by a 3.3% decline in the banking index.
On Friday, ratings agency Fitch affirmed Turkey's 'BB-' rating with a stable outlook, saying the rating reflected weak external finances, a track record of economic volatility, high inflation and political and geopolitical risks.
Turkey has closed its border with Iran and halted incoming flights as a precaution to stop the potential spread of the virus. Iran said 12 people have died and up to 61 have been infected by the virus.
"Geopolitical risks are also among the factors pressuring the lira," the trader said. "The emergence of the virus in a neighbouring country like Iran and its impact on Turkey will continue to be closely monitored." Separately, Turkey has thousands of troops stationed and poised for battle in Syria's Idlib and announced on Saturday that its 16th soldier had been killed there.
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