Turkey’s lira tumbled in Asian trade on Monday

Turkey’s currency takes a tumble amid diplomatic dispute with US

  • Turkey’s lira tumbled in Asian trade on Monday
  • The currency’s drop comes amid increased tensions between Washington and Ankara
  • Both countries have mutually suspended visa services

The Turkish lira dropped sharply on Monday after the U.S. Embassy in Ankara announced a suspension of visa services — a move Turkeyquickly matched.

Fake US Dollar and Turkish Lira currency often used as a novelty gift is seen for sale at a tobacco shop in a market on December 5, 2016 in Istanbul, Turkey.

Chris McGrath | Getty Images
Fake US Dollar and Turkish Lira currency often used as a novelty gift is seen for sale at a tobacco shop in a market on December 5, 2016 in Istanbul, Turkey.

The dollar fetched as much as 3.7694 lira on Monday during Asian trade, compared with around 3.616 lira on Friday — a move of over 4 percent. That’s not too far off from the lira’s record low of around 3.9407 per dollar, touched in January. The dollar was at 3.7225 lira at 8:45 a.m. HK/SIN.

The visa-service suspensions were “a tit for tat, if you like, reaction. That sparked concerns over the stability of the lira,” Rodrigo Catril, currency strategist at National Australia Bank, said on Monday. “Turkey has a huge current account deficit and therefore a huge need for funding.”

A country develops a current account deficit when the value of its imports exceeds its exports, leaving a deficit that usually must be financed by borrowing.

Turkey’s current account deficits averaged $4.75 billion a month for the last three months, the widest since 2013, according to data from Macquarie.

The decline came in the wake of rising tensions between the two NATO members.

On Sunday, the U.S. Embassy in the Turkish capital said on Twitter that “recent events” had forced Washington to reassess Ankara’s commitment to the security of the U.S. mission and its personnel. All non-immigrant visa services had been suspended “effective immediately,” the embassy added.

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