Lira is hit by the Federal Reserve's statement
Lira dropped to a record low in trading against the US dollar on May 7. The trading has been influenced by the Federal Reserve’s comments on the potential swap line with Turkey.
By 08:00 GMT lira was at 7.24, losing 0.5%. This is its lowest position since the 2018 crisis. The losses are happening for the fifth session in a row. Turkish bonds followed the currency down. 2030 issue lost 2.5%.
Turkey is currently headed in its second large recession in just two years. The country requested the Federal Reserve and other central banks to provide access to the funds. The national reserves are reduced to about US$25 billion. In the beginning of the year it was US$40 billion.
While Fed has not yet given any straight answer, its policymaker stated that the organization already established lines with the nations that keep up “mutual trust” with the United States. Traders have interpreted this statement as a refusal.
The authorities believe that the lira will remain under pressure for some time.Berat Albayrak - Turkish Finance Minister - stated that the reserves are completely adequate and sell-off is the right tactic.