Turkish lira eases from historic low against dollar after CB move

The Turkish Economy Minister said on Monday that the weakening lira was due to the impact of the global crisis. "There is general shift away from risk which is strengthening the dollar in every corner of the globe," Mehmet Simsek was quoted as saying by Dogan News Agency. Â

 

The lira, having lost some 25 percent against dollar in 2008, has further weakened more 15 percent since the beginning of 2009. 

 

CONCERNS OVER ECONOMYÂ

Analysts say the Turkish Central Bank's reactions are going to be important during this period to calm the rising money markets. "The bank can lower required reserve ratio for foreign currency accounts. It did this before," Murat Salar, an economist at Istanbul Based A Brokerage, told hurriyet.com.tr.

 

The bank is unlikely to employ any other methods to intervene, Salar said adding that the current foreign currency level makes the long-awaited loan deal with the International Monetary Fund (IMF) more important.

 

The currency's weakening position is likely to deepen concerns about Turkey’s economy as the government continues to hold out against finalizing a new loan arrangement with IMF, saying some conditions attached to the loan are unacceptable. Talks for a possible new loan were suspended in February. 

 

Prime Minister Tayyip Erdogan said on March 2 that Turkey does not need loans from the IMF and may not conclude talks on a possible economic agreement until after the local elections on March 29. The country, which is seeking to avert a recession, has external financing needs of about $30 billion this year, according to the central bank’s estimation. 

 

Turkey's gross domestic product expanded 0.5 percent in the third quarter of the year, its slowest pace in six years, after growing 2.3 percent in the second three months. 

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