The Turkish lira hit its weakest intraday level against the dollar since mid-October on Wednesday, as investors weighed up risks generated by challenges to Istanbul election results and strains in relations with the United States.
The lira weakened to as much as 5.8912 from a previous close of 5.83, bringing declines this year to 10 percent, on top of a near 30 percent fall in 2018. Dollar strength contributed to the move. It was the weakest level since Oct. 15, excluding a brief overnight “flash crash” in January.
The Turkish currency stood at 5.8768 at 1538 GMT.
Elections and US relations
“Assessments of the Istanbul election challenges are continuing, this is a risk. Also, US relations are being discussed again,” said one banker. “Negative lira expectations will continue to be priced in.”
Turkey’s election board on Tuesday rejected one of a series of objections by President Tayyip Erdogan’s AKP to last month’s Istanbul elections, which were narrowly won by the opposition. The AKP wants the elections annulled and re-run.
Unease about tense relations with the United States has been fueled by the US demand on Monday that buyers of Iranian oil, including Turkey, stop purchases by May 1 or face sanctions, a move to choke off Tehran’s oil revenues.
Washington reimposed sanctions in November, unilaterally pulling out of a 2015 accord between Iran and six world powers to curb Tehran’s nuclear program. Ties with Washington have been under pressure for months over Turkey’s order for Russian S-400 missile defense systems.
Turkish media reported last week that Turkey was considering whether S-400s which Turkey is buying from Russia could be deployed in Azerbaijan or Qatar, rather than within Turkey, as a way to overcome the dispute.
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