Turkey’s lira headed towards longest run of losses since 1999

The lira is headed for its longest run of weekly losses this century as Turkey’s new economic team curbs its intervention in the currency market.

The Turkish currency depreciated by another 1 per cent this week, after last week’s 11 per cent slide. It has now been falling since early March, in the longest streak of losses since 1999.

The declines have quickened following President Recep Tayyip Erdogan’s re-election on May 28.

In the 18 months before the vote, the central bank used up about $200 billion of reserves trying to bolster the currency, yet it remained one of the worst performers in emerging markets.

Mr Erdogan has now appointed two former Wall Street bankers – Mehmet Simsek and Hafize Gaye Erkan – to run the country’s finances, signalling a potential shift from heavy state intervention in favour of allowing the market to determine the currency’s fair value.

For many foreign investors, the lira is finding its equilibrium.

Expectations are growing for capital inflows into the country’s bonds and stocks to increase.

Overseas investors purchased a total of $287 million of Turkish bonds and stocks last week, the biggest inflow since December, the latest central bank data showed.

Updated: June 16, 2023, 11:24 AM