Turkish lira goes down

Turkey is making its way towards another currency downtime, with the Turkish lira diving to its lowest value for almost a year after Turkey’s election authorities canceled the recent municipal election outcomes for Istanbul.

The decision provoked immediate street riots in Turkey’s largest city against the cabinet of President Recep Tayyip Erdogan, and pushed the evergreen buck to 6.1976 lira in early trade on Tuesday. It appears to be the highest value since last September, when soaring dollar interest rates along with a heavy foreign debt repayment schedule threatened to heavily impact Turkey’s banking system.

The major bank had to have interest rates raised steeply to defend the Turkish lira at the time, while the economic hardship since then made a contribution to Erdogan’s AK party losing control of the country’s three key cities in elections in March. What’s more, his critics currently accuse him of utilizing the state machinery to have a legitimate election overturned.

As a matter of fact, the Turkish lira headed south by 2% reacting to the news and has slumped by 1.5% since then. Turkey’s currency was at 6.1707 versus the evergreen buck. For the year, it has rallied by 16.3% against the greenback. The given outcome makes it the worst performing asset of all G-20 currencies, excluding the Argentine peso.

In addition to this, the Australian dollar rebounded steeply after the country’s major bank left its cash rate at 1.5%, thus disappointing many investors who had anticipated a rate cut.

Gauging the greenback’s purchasing potential versus its main peers the USD index hit 97.155, sliding by 0.1%.

Traders are still uncertain what follows from the American decision – whether the US would slap extra duties on Chinese goods or not.