LONDON: The Turkish lira tumbled on Thursday despite efforts by the finance minister to defend the country’s fiscal policy.
Berat Albayrak said the central bank’s foreign exchange reserves were more than adequate even as the currency continued to fall during his address.
The son-in-law of President Tayyip Erdogan has been in the spotlight as the economy has been hammered by a currency crisis which pushed the lira down to a record low of 7.25 to the dollar on Thursday.
The president has ruled out seeking help from the International Monetary Fund.
The lira has now lost more than 18 percent against the greenback since the start of 2020 and has been in retreat for six days on the trot.
Earlier Reuters reported that a Fed policymaker — asked on Wednesday about extending swap facilities to Turkey and others in need — said the Fed already has lines with countries that have a relationship of “mutual trust” with the US, and the highest credit standards.
Richmond Fed President Thomas Barkin said the facilities were meant to stabilize markets and not provide funding as such.
Nikolay Markov, senior economist at Pictet Asset Management, told the newswire it was “just a matter of time” before the lira’s weakness and low reserves lead to a crisis in which Turkish firms or banks are unable to meet some debt obligations.
“There is no immediate risk of a full-fledged financial crisis but the risk has increased recently,” he said.
The shutdown of the tourism industry because of the COVID-19 pandemic has been a further blow to the Turkish economy, sapping the country of foreign currency and putting thousands of people out of work as the country nears what would normally be the busy high season.