In August, Value Dropped to Around 6 Lira per Dollar... Rapid Outflow of Foreign Capital
[Asia Economy Reporter Jeong Hyunjin] The Turkish lira exchange rate surpassed 8 lira against the dollar on the 26th, hitting an all-time low.
According to Bloomberg News, as of 3:33 PM Korean time on the same day, the lira exchange rate stood at 8.0042 lira per dollar, up 0.54% from the previous day. Bloomberg reported that the Turkish lira has been in a significant decline for nine consecutive weeks, marking the longest downward trend since 1999. The lira exchange rate is continuing to widen its gains.
The Turkish lira has depreciated due to ultra-low interest rates, a decrease in foreign investors caused by U.S. sanction risks, and an economic recession triggered by the COVID-19 pandemic. Until early August, the lira exchange rate was in the 6 lira range per dollar, then rose to the 7 lira range, and on this day reached the 8 lira range during trading. The lira has lost more than 25% of its value just this year.
Foreign investors are rapidly withdrawing funds from Turkey. Bloomberg reported that the amount of foreign capital withdrawn from the Turkish bond and stock markets this year alone reached $13.3 billion, the largest scale since 2005. Bloomberg stated, "The Turkish lira has surpassed the psychological support level of 8 lira per dollar."
Meanwhile, Turkish President Recep Tayyip Erdogan has recently been in conflict with French President Emmanuel Macron following a verbal dispute. The conflict arose after a history teacher at a French middle school was brutally murdered by a youth radicalized by Islamic extremism, and President Macron defended the satire of the Islamic prophet Muhammad as freedom of expression, which provoked strong backlash from Islamic countries. President Erdogan even harshly criticized President Macron, saying he "needs psychiatric treatment."
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