The trade in the morning hours saw Turkish lira falling to 8,47 versus the US dollar; close to its record low at 8,58 amidst worries about Turkey-US relations as the U.S. President Biden recognised the mass killing of ethnic Armenians in Ottoman Turkey as genocide.
The new central bank Governor Kavcioglu’s televised interview elaborating on the monetary policy also added to the tensions as the Governor failed to justify the USD 128 billion fx reserve sales creating further stress on the ambiguity of the monetary policy conduct in Turkey.
The coming months will see the start of the Halkbank case in NY which will add further tension to already sour ties. Washington and Ankara are also at odds over Erdogan’s purchase of S-400 air defense missiles from Russia, which NATO says are not compatible with the alliance’s defenses. That has prompted the United States to exclude Turkey from a program to develop and purchase the F-35 stealth fighter jet.
The Turkish lira recovered to 8.35 versus the dollar in the later trading hours raising suspicions about state bank intervention again.
The Cabinet will meet today to decide whether to implement a full 2-3 week lockdown given the rise of COVID-19 cases in the country and how to respond to the US President genocide announcement.
Pulling back Turkey’s military support to NATO seems to be among the choices.