The Turkish lira hit a new low against the dollar on yesterday as worries about the country’s political and economic outlook and concerns about the impact of rising oil prices on energy imports weighed on sentiment, traders said.
The main Istanbul share index dropped 2.2 percent while the yield on the 10-year benchmark bond rose to 11.31 percent from 11.13 percent a day earlier. The lira weakened 10 percent to the dollar in November - its worst month since the 2008 financial crisis - hit by a resurgent U.S. dollar and concern about a widening crackdown after Turkey’s failed July coup attempt.
It dropped another 1.5 percent yesterday to a record 3.4920 as oil swept to a six-week high after Opec agreed to cut crude output. “The lira is being affected negatively by the rise in oil prices as Turkey is a net oil importer,” said one forex trader, adding that the market was also preoccupied by the prospect of a referendum on introducing an executive presidency.
Prime Minister Binali Yildirim said his ruling AK Party was planning to present to parliament its constitutional change proposal next week and may hold a referendum on the reform at the start of next summer.
Financial markets are concerned about the political consequences of such a reform and are worried that a fifth national vote in just over three years will distract policy makers from badly-needed reforms.
