The Turkish lira extended losses on Thursday, slumping to its lowest level in regular trading since September 2018, as public concern intensified about the potential spread of the coronavirus.
The lira dropped 1.4 percent to 6.29 per dollar at 6:14 p.m. in Istanbul. The main BIST-100 index of shares dropped 7.2 percent to 93,713 points.
The Turkish lira slumped to a record low of 7.2 per dollar in August 2018 and its recovery from that crisis, sparked by a political spat with the United States and an overheating economy, has been volatile, prompting many Turks to stock up on foreign currency in a so-called dollarisation of the economy. The coronavirus outbreak – Turkey announced its first case this week – may exacerbate that problem.
The government is seeking to reassure citizens that it is taking all measures to contain any spread of the virus. Until early Wednesday, Turkey was the only major country in the region not to announce any cases. That has raised suspicion of a possible government cover-up.
Turkish President Recep Tayyip Erdoğan convened a meeting of ministers and other senior officials at his palace in Ankara on Thursday to discuss measures to combat the illness. In a speech this week, Erdoğan assured the public that steps the government was taking were stronger than the virus itself. Just over 2,000 people have been tested in the country of 80 million people, according to the latest data.
Local residents’ bank deposits in foreign currency now equal more than 25 percent of total deposits, an increase of some 10 basis points since mid-2018, according to central bank data. State-run banks have intervened in the currency markets to buy lira in recent months to help bolster its value. But economists have warned that rate cuts by the central bank interest rates are negative when accounting for inflation – could destabilise the currency again as the authorities chase ambitious economic growth goals.
On Thursday, the Education Ministry said all mass events at schools would be cancelled until further notice, including assemblies, symposiums and sports events. The Trade Ministry said it was intensifying inspections of retailers across the country due to complaints about rising food prices. People were queuing at supermarkets and several retailers started to run out of some goods, Diken news website reported.
But Turkey’s sports minister said there were no plans to cancel soccer games across the country this weekend, or to hold them without spectators. A directorate responsible for religious affairs has made no public statements about the virus, such as measures to be followed at the country’s often-crowded mosques.
Source: Ahval