The Turkish lira on Tuesday fell sharply against the U.S. dollar as well, as the euro, as tensions between Turkey and the U.S. over military involvement in Syria took a negative turn.
The lira
USDTRY, -0.1441%
EURTRY, -0.0399%
dropped nearly 2% against the U.S. dollar and more than 1.5% against the euro. The greenback last bought 5.4925 lira, up from 5.3848 lira late Monday in New York, while one euro fetched 6.2827 lira, down 1.67. It was the worst-performing currency of the day in Tuesday trading.
A stronger U.S. dollar
DXY, -0.08%
against most of its rivals exacerbated weakening for the Turkish currency.
One condition President Donald Trump placed on a much-publicized plan to withdraw U.S. troops from Syria was an assurance of safety of Syrian Kurdish allies. Kurdish forces had fought alongside the U.S. against Islamic State, but are viewed as a terrorist group by the Turkish government.
Turkey’s Kurdish minority — many of whom of live in the country’s southeast, bordering Syria, Iraq and Iran — has long laid claim to becoming an independent nation.
Read: Bolton says U.S. won’t leave Syria until Islamic State is defeated, Kurds are safe
White House national-security adviser John Bolton was in Ankara on Tuesday to compel Turkey not to target Kurdish fighters.
Turkish President Recep Tayyip instead warned in an address to the Turkish parliament that Ankara, which has stationed troops along the border, stood ready to launch an offensive into northern Syria, describing it as a “necessary lesson” to the Kurdish fighters.
“John Bolton made a serious mistake,” Erdogan said in front of parliament. “Those who share the same view are also deeply wrong.”
Erdogan refused to meet with Bolton.
Relations between Washington and Ankara were already frayed, largely due to U.S. pastor Andrew Brunson, who was detained in Turkey. Brunson was released in October 2018. The worsening diplomatic ties, paired with weak economic fundamentals in Turkey and threats of trade tariffs from the U.S., have spooked investors.
Turkey’s economy has been struggling with high, double-digit consumer-price inflation, an ailing currency and rising interest rates in the U.S., which have made Ankara’s dollar-denominated debt burden more expensive in local currency terms.
In 2018, the dollar rallied 39.4% against the lira, reflecting the economic and political struggles, as well as currency crisis that Turkey struggled with throughout 2018.
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Source : MTV
