As Turkish President Erdogan orders arrests of journalists, the lira falls 4% to all-time lows against USD.
The lira hits levels last seen in January this year, falling this week from the 2.29 level to the 2.4 level before recovering slightly to 2.35.
The EU has criticized the latest social crack-down in Turkey but Erdogan responded by saying, “We can lift ourselves up on our own; please keep your advice for yourself.” According to the IMF Turkey is somewhat dependent on foreign financing especially for the success of corporates, requiring over $200 billion a year. Therefore, when the internal policies of the country violate the ethics of investing countries, the Turkish lira suffers, as does any accession plans that Turkey has to join the EU. The EU accounts for three-quarters of direct investment into Turkey.
The arrests in question, carried out on Sunday, pertained to 24 media representatives including the editor of The Zaman newspaper and the head of Samanyolu TV channel, which have affiliations to Islamic cleric Fethullah Gulen, the spiritual leader of the Hizmet movement, a former ally of Erdogan.
Last week, Turkey announced that the country’s GDP fell below expectations at 1.7% growth in quarter three, the lowest figure seen since 2012, versus the forecast of 2.9% in Q3, the full year forecast of 3.3%, and the historic trend figure of 5%. Bad weather conditions for low agricultural output were blamed alongside new legislation to limit bank lending, an interest rate rise, increased government spending at 7%, and low domestic demand due to the weak lira.
MT4 chart: USDTRY
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