Late on Friday, the Turkish Lira fell to the weakest level since mid-May reacting to report on jumping inflation.
To close the week, the Lira hit 6.865/USD following its slide to as far as 6.88 in late-day trading after a very tight range in the past two weeks.
Attributing to the fall was a report from the Fitch rating agency, that Turkey’s inflation soared by 12.6% year-on-year in June. The report raised expectations that the central bank is to increase the interest rate as inflation has drifted further from the target.
Previously last week, the bank surprisingly stopped an almost year-long easing cycle due to the risk of Lira falling by 13% this year, low foreign exchange reserves, and Turkey’s relatively high external obligations.
Looking ahead, Fitch estimated that Turkey’s balance of payments is facing a sizable downside risk as external pressures remain as the country’s main credit weakness.
