Turkey enters a bear market in US dollar terms
Deteriorating relations with US, Gulf States weigh on currency
The Turkish lira tumbled again today to 3.96 to the dollar, barely better than its intraday low of 3.98 on Nov 22. The US-traded Turkish equity ETF TUR has fallen from a Sept. 1 peak of $47.12 to just $37.30, down over 20%, and now in a bear market.
Media reports point to political problems with the United States over the upcoming trial of a top Turkish banker with close ties to the Erdogan regime. Mehmet Hakan Atilla, a top official of Halkbank, is accused of laundering hundreds of millions of dollars of Iranian money to evade international sanctions. Halkbank is down almost 8% today on the Istanbul stock exchange.
Also weighing on the Turkish currency is the country’s close relationship with Iran. The Sunni Gulf States have been a major source of funding to cover Turkey’s large current account deficit, and geopolitical strains are a possible reason for the Saudis and others to reduce Turkish exposure.