Turkish Lira Drops Almost 1% Against US Dollar on Russian Ambassador Assassination in Ankara

The assassination of the Russian ambassador in Ankara has rattled financial markets, especially the Turkish lira, which has dropped almost 1% against the greenback.



Turkish President Recep Tayyip Erdogan has previously called on patriotic Turks to support the country's plunging currency by converting their foreign assets into lira. But today’s events may set the stage for further losses for the Turkish national currency as global investors react to Turkey’s deteriorating geopolitical situation.

Additionally, Erdogan told reporters two week ago that Turkish authorities are looking to stabilize the lira by establishing local currency trading agreements with Turkey’s biggest trading partners: Russia, China and Iran.

However, today’s brutal assassination of Russian ambassador Andrey Karlov - which can be viewed on various social media sites - may put a full stop to any future currency trading agreements between Turkey and Russia.


The lira’s disastrous performance against the dollar was greatly exasperated by the U.S. presidential election, which sent the USD/TRY exchange rate to an all-time high of 3.5966 by the 2nd of December, with the area between 3.54 - 3.56 acting as resistance for most of this month.



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2 comments :

  1. EXPECT RESTRICTIONS ON THE FREEDOM OF MOVEMENT OF THE TURKISH LIRA

    A dreadful occurrence, but one that is unlikely to have much long-term impact on Turkish trade with Russia, and hence on the value of the Turkish Lira from an economic point of view. Russia does not flex easily, nor do either of Turkey’s other main trading partners China and Iran. Unfortunately, the individual who shot the Russian Ambassador, and apparently, the assassin was an off-duty police officer, has provided an excuse for the implementation of even more civil control.

    Expect any decline in the Turkish Lira to be slow, but steady, as people try to secure savings against currency loss. The current government of Turkey is likely to rapidly introduce currency controls and attempt to stop the flight of capital. Calling on people's “loyalty” will not have much effect, and is only likely to exasperate things more. First moves are likely to be some attempt at limiting bank transfers, and then the withdrawal of the highest value banknotes, with the excuse of preventing tax evasion, criminal activities, and attacks on the currency by hostile foreign influences. I suppose we could call it the Venezuelan syndrome.

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  2. A drop in value was inevitable as fears of recrimination by Russia have deepened. However attitudes towards the Turkish government both internally and externally will continue to weigh heavily on the Turkish economy in the future.

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