TODAY’S ZAMAN – Lira dives to fresh record lows after US job data

Lira dives to fresh record lows after US job dataThe Turkish lira hit fresh record lows on Friday after strong US jobs data raised the specter of the US Federal Reserve (Fed) raising interest rates by mid-year and efforts by Turkish politicians to ease the pressure on the currency failed.The lira fell to an historic low of 26474 against the US dollar on Friday.

The lira was already hurt by investorsand#39 fears of political interference in monetary policy and by general jitters about emerging markets that face headwinds from a resurgent dollarPresident Recep Tayyip ErdoIanand#39s strident criticism of the central bankand#39s monetary policy has unnerved investors who fear the weakness of the lira will boost inflation further The lira slipped 02 percent and is down 10 percent this year Elsewhere, the dollar rose to an 11-year high against the worldand#39s major currencies and US bond yields jumped on Friday, as US jobs figures reinforced expectations the Fed will push ahead with its first rate hike in almost a decade. Payroll data showed US companies added 295,000 jobs in February, well above forecasts for an increase of 240,000.

It was the longest run of 200,000-plus increases since 1994.The main stock index Borsa Istanbul (BIST) lost 044 percent to 80,431 points, while the benchmark 10-year bond yield eased to 815 percent from 819 percent at Thursdayand#39s close.

On Friday, Turkish politicians, including ErdoIan, rushed to ease the tension in markets. These, however, failed to avert the liraand#39s freefall.

andldquoOne shouldnand#39t say anything to the central bank from now on,andrdquo Deputy Prime Minister Bulent ArIn said in Ankara on Friday. ArIn said threatening the central bank and intervening in its policies is andldquonot right,andrdquo adding doubts created over the central bank may have stirred the liraand#39s fall.

On Friday, the main opposition Republican Peopleand#39s Party (CHP) deputy chair responsible for the economy, Selin Sayek Bke, referred to the current decline in the liraand#39s value to an ongoing currency devaluation. andldquoThe president is interfering in markets with speculative remarks to benefit from the depreciation in the lira andhellip We saw similar political interventions back in the 1990s,andrdquo Bke said in her written statement on Friday.

Earlier on Friday, the lira eased off new record lows after Prime Minister Ahmet DavutoIlu said in New York that he had spoken with the central bank about the currencyand#39s weakness and all necessary steps would be taken.DavutoIlu has been meeting bankers and fund managers in New York, along with Deputy Prime Minister Ali Babacan and Finance Minister Mehmet IimIek, in an effort to soothe investor concerns over central bank independence and persistent lira weakness.

DavutoIlu told reporters in New York that he had spoken with Turkish Central Bank Governor Erdem BaII about the liraand#39s weakness and andquotevery kind of measureandquot on the issue would be taken if necessary. He did not elaborate.

andquotTurkey has one single agenda andhellip The unstoppable depreciation of the lira has now become the single biggest problem of every citizen and every private company,andquot Istanbul Analytics economists wrote in a research note.ErdoIan said on Friday that he would hold talks with BaII and Babacan after the liraand#39s decline to record lows.

Speaking to reporters in the capital Ankara, ErdoIan said an andquotinterest rate lobby,andquot an ill-defined group he has accused of trying to sabotage Turkeyand#39s economy through higher rates, was at work in the liraand#39s slide. andquotThere is the known work of the interest rate lobby and the latest developments are completely due to dollar-euro moves,andquot ErdoIan said.

andquotThose who invest excessively in the dollar may end up being stranded.andquotHe said both BaII and Babacan had requested talks with him and that they would meet after Babacan returns from New York.

SOURCE: Today’s Zaman