Turkish Lira’s value at lowest in 27 years

Duvar English – Reuters

Turkey’s Central Bank announced that the real effective exchange rate (REER) of the lira hit the lowest level in 27 years, as souring relations between Ankara and Brussels added to the country’s geopolitical woes, bringing lira to 7.88 against the dollar on Oct. 7.

Turkey’s Central Bank’s real effective exchange rate (REER) index sunk to 62.21, dropping by 1.59 points and falling below the level it saw during the 2018 Pastor Bronson crisis, raising concern among analysts.

Based on the consumer price index, the real effective exchange rate is a powerful tool to measure the currency’s purchasing power.

The REER was a 91.69 in September 2017, dropped dramatically to 62.56 in September 2018, and rose back up to 76.96 in September 2019.

The lira sank as much as 1% due to lingering concerns over the Caucasus conflict and possible U.S. sanctions, while the European Union said chances of Turkey’s potential entry into the bloc were evaporating.

The currency is one of the worst performers among its emerging market peers so far this year, having shed nearly a third of its value.

The tourism-dependent Turkish economy has been hit hard by the COVID-19 pandemic. Elevated inflation levels and a second wave of coronavirus cases worldwide are expected to hamper the country’s fledgling recovery.

“It’s a perfect storm at the moment hitting Turkey… It’s one of the most vulnerable emerging markets out there due to a very fragile institutional setup and very large external funding needs,” said Jakob Christensen, chief analyst, head of EM research at Danske Bank.

Turkish stocks fell about 0.2%.

from Duvar English https://ift.tt/3jGvokJ

About CHP EU Representation

The CHP was founded on 9 September 1923, about one and half month before the proclamation of the Republic of Turkey. The first President of modern Turkey’s oldest party was M. Kemal Atatürk. Today CHP is a social-democratic party, member of the Socialist International and associate member of the Socialist Group at the European Parliament. The scope of the CHP bureau in Brussels is not limited to the bilateral framework of Turkey's EU accession process. Issues such as the information society, energy policies, social development, climate change, international trade and security are among the different focus areas. The EU-Turkey relations are about integration and need multiple, plural and horizontal channels of communication. The CHP supports and promotes Turkey's EU membership process also by being more present and active in Brussels The CHP's Representative to the EU is Ms Kader Sevinç who previously worked as an MEP advisor at the European Parliament and in the private sector.
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