Turkish lira hits new record low amid political crisis

AFP, Thursday 2 Jan 2014

Turkey's political unrest strains the local currency despite central bank's desperate attempts

The Turkish lira plunged Thursday to a new low against the dollar and shares also dropped, pressured by a corruption scandal roiling the government.

The lira fell to 2.1778 to the dollar while the main Istanbul stock exchange index lost 1.91 percent to 66,503.69 points.

Turkey's financial markets have tumbled on political jitters with Prime Minister Recep Tayyip Erdogan's government rattled by a corruption probe that has targeted several key allies.

The lira's continuing fall is despite the central bank's decision last week to sell off some of its dollar reserves in order to shore up the currency, also hit by the scaling down of the US monetary stimulus policy.

The central bank plans to inject 450 million dollars daily until the end of January.

Deputy Prime Minister Ali Babacan said on Thursday that the impact of the political crisis was temporary.

"It is a temporary situation. It is to do with the political perception," Babacan told a business conference in Ankara.

He had said on Tuesday that government's economic growth forecast for 2014 remained at four percent despite the turmoil.

A series of tax hikes on cars, cigarettes, alcoholic drinks and mobile phones came into effect in Turkey on Wednesday.

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