Turkish Lira plunges to a record low against US dollar

Turkish Lira has been under pressure for the last few months due to weakening growth fundamentals and sharply rising inflation. The currency touched a record low in the wake of declining credibility of the CBRT as the central bank left the policy rate unchanged during its last meeting amid sharply rising inflation. This was in contrast with financial market’s expectations of a higher policy interest rate by the CBRT to contain inflation. The inaction of the central bank reinforced investors’ fears over the bank’s independence. Rising political risk has also compounded the currency’s woes amid the weak macroeconomic fundamentals. The US President Donald Trump announcement to impose sanctions on its NATO ally. The Turkish delegation to Washington failed to show any progress towards lifting the US sanction.