Turkish lira falls against dollar on global worries

The lira eased to 1.2210 against the dollar on Thursday after touching a low of 1.2235. The lira began the day’s trading at 1.2120.

A drop in oil prices, which tumbled this week after Hurricane Gustav left energy facilities in the Gulf of Mexico mostly unscathed, benefited the U.S. currency. Oil prices stand around $110 on Thursday after falling close to $105, the lowest since April, on Tuesday.

The U.S. dollar also rose hitting its highest level against the euro since January, on growing expectations the U.S. economy would outperform that of Europe.

However, the euro has risen somewhat against the dollar as the European Central Bank and the Bank of England to kept interest rates steady. The 15-nation euro was bought at $1.4535 in European morning trading Thursday, up from the $1.4493 it bought in late New York trading Wednesday.

Recession fears in the region was fueled after Wednesday's data showed that falling investment and private consumption led the economy to shrink 0.2 percent from April to June,  the first-ever quarterly contraction in the euro zone.

The European Central Bank kept its benchmark interest rate at 4.25 percent as expected on Thursday as the Bank of England left interest rates on hold at 5.0 percent for a fifth month.

The ECB has long said its main concern is taming inflationary pressures and that it will tighten policy if price risks remain high.

Analysts said investors were increasingly getting on board with the dollar as a safer place to allocate cash compared with currencies whose countries were further behind in terms of economic readjustment in the wake of the global credit crunch.

Photo: Hurriyet Archives