Turkish lira drops to two-month low against dollar

The Turkish lira on Friday dropped to its lowest level in two months against the U.S. dollar, to 2.29 liras.

Turkish lira drops to two-month low against dollar
World Bulletin/News Desk
The Turkish lira on Friday dropped to its lowest level in two months against the U.S. dollar.

Data on rising U.S. retail sales as well as on declining requests for unemployment benefits drove the dollar to 2.2983 liras. U.S. retail sales increased 0.6 percent last month after rising 0.5 percent in October, the Commerce Department reported on Thursday, and weekly applications for unemployment benefits dropped 3,000 to 294,000, the Labor Department said.  

And the lira could drop even lower, according to Ridvan Basturk, a research analyst at ALB securities. Basturk said that, for the Turkish lira, 2.30 against the dollar was a strong resistance point. "Now that the lira had passed that point, there is a possibility that it will fall significantly more." 

Should the lira change direction against the dollar, Basturk said that 2.2890 will be a key support level. 

"The next week is critical for the Turkish lira because the U.S Federal Reserve is to meet, and there is a chance that the Fed will hike interest rates. In that case, the Turkish lira could fall even harder." 

The Turkish Central Bank is prepared for this eventuality. "The Turkish Central Bank is ready to act to limit the effects of a rate-rise decision by the U.S. Federal Reserve, whether by also raising our interest rates or by keeping monetary policy tight until the inflation outlook improves," Central Bank Governor Erdem Basci said. 

Turkey's Central Bank reserves, which uphold the value of the Turkish lira, decreased by nearly $1.6 billion to $131.9 billion in the week from Nov. 31 to Dec. 5, according to the Central Bank's weekly figures released Thursday. 

The Bank's gross foreign exchange reserves were down by nearly $1.45 billion at $111.7 billion. Gold reserves also decreased by $95 million in the week to $20.18 billion.

On Monday, the Turkish Central Bank announced that it would increase the daily foreign exchange auction amount to $40 million from a minimum of $20 million.

Güncelleme Tarihi: 13 Aralık 2014, 09:30