Turkish lira falls to record low in real terms in March

Turkish lira falls to record low in real terms in March
By bne IntelliNews April 4, 2018

Turkey’s CPI-based Real Effective Exchange Rate (REER) index fell to a record low of 83.43 in March from 84.95 in February, central bank data showed on April 4.

A higher REER points to the Turkish lira (TRY) gaining value in real terms against foreign currencies while a decline in the index indicates it has lost real value.

The TRY was trading at 4.0008 against the USD as of 21:00 Istanbul time on April 4, up 0.3% d/d, after hitting 4.0274 during earlier trading hours on worries about Turkey's sticky double digit inflation, surging current account deficit and other economic imbalances, as well as on anxiety over a possible trade war between the US and China.

The record high level of TRY4.0361 to the dollar was recorded on March 23.

The currency's losses, which occurred despite gains in other emerging market currencies, added to concerns over its likely path in the near future.

The dollar index, showing the USD’s performance against a basket of world currencies, was down 0.12% d/d on April 4 to 90.096, according to Bloomberg data.

The index was at the level of 102-103 at the beginning of 2017 and it gradually fell to around the 90 level by the end of the year.

A possible strengthening in the dollar index on expected rate hikes from the Fed could mean even worse woes for the TRY across the remainder of the year.