Turkish lira drops to record low, stocks fall after PKK attack

By bne IntelliNews September 7, 2015

The lira weakened to an all-time low and Turkish stocks fell on Monday after the Kurdistan Workers’ Party (or the PKK) killed 16 soldiers in a single attack on September 6 in Turkey’s southeast, causing more concerns over security ahead of the November polls, rattling investors. The political uncertainty emerged after the June’s inconclusive parliamentary elections has been keeping the local currency under pressure.

The lira fell as much as 1.29% in early Monday trading on the news, weakening beyond the psychological barrier of 3 to the dollar. But the currency later trimmed some of its losses, trading at 0.8% lower against the dollar at 3.0275 at 11:50 local time, shares dropped 1.28% on the back of the sharp decline in the lira.

The lira tumbled more than 20% this year against the dollar, making it one of the worst performing currencies in the emerging markets universe. Concerns about the local currency are amplified by the prospects of FED rate increase later this year. Investors are also unnerved by the central bank’s reluctance to raise interest rates to defend the currency.

PKK militants on September 6 carried out of the deadliest attacks in year, killing 16 soldiers, including two high-ranking officers in an ambush on a convoy of armoured vehicles in the Daglica district near Turkey’s border with Iraq. Turkish jets bombed several suspected PKK targets in response to the assault on the security forces.

Policy Rate (%)
Date one-week repo
May-2010 7.00
Dec-2010 6.50
Jan-2011 6.25
Aug-2011 5.75
Dec-2012 5.50
Apr-2013 5.00
May-2013 4.50
Jan-2014 10.00
May-2014 9.50
Jun-14 8.75
Jul-14 8.25
Jan-15 7.75
Feb-15 7.50
Source: Central Bank

Related Articles

Erdogan warns Iraqi Kurds will lose “opportunities” if independence vote proceeds

Turkish President Recep Tayyip Erdogan has warned the Iraqi Kurds that it is in their interests to call off their planned September 25 independence referendum because it “may lead to a process that ... more

Armenia may declare protocols on normalising relations with Turkey “null and void” UN told

Addressing the UN General Assembly, Armenian President Serzh Sarkisian on September 19 warned that Yerevan may be set to declare two protocols aimed at normalising relations with Turkey "null and ... more

Russia’s Rosneft mulls Kurdistan-Turkey-Europe gas pipeline

Russia’s Rosneft is exploring the possibility of building a 30bn cubic metre (bcm) pipeline that would from 2020 deliver natural gas supplies from the Iraqi Kurdistan region to Turkey and ... more

Dismiss