Turkish lira slides

Standoff with Washington back in focus

ISTANBUL (Reuters) – The Turkish lira tumbled nearly 5% against the dollar on Monday after a week-long holiday, hit by persistent concern about a diplomatic rift with Washington over a US pastor on trial in Turkey.

The slide left the lira down about 40% this year, driven by worries over President Tayyip Erdogan’s grip on monetary policy and the stand-off with the United States over the fate of evangelical Christian Andrew Brunson. He is being tried in Turkey on terrorism charges that he denies.

Turkish Finance Minister Berat Albayrak said on Monday that US trade sanctions against Turkey could destabilize the region and ultimately bolster regional terrorism and the refugee crisis, at the same time pushing for better ties with Europe given the deepening rift with Washington.

With the dollar stronger globally, the lira weakened as far as 6.2960 from 6.00 on Friday, when a holiday to mark the Muslim festival of Eid al-Adha came to an end. It stood at 6.2100 in the mid-afternoon.

“The exchange rate sensitivity created by the tension between us and the United States continues,” said Seda Yalcinkaya Ozer, an analyst at brokerage Integral, adding that emerging market currencies were generally weaker against the dollar.

Investors are also worried about a US Treasury investigation into majority stateowned Turkish lender Halkbank , which faces a potentially hefty fine for allegations of Iran-sanctions busting. The bank has said all of its transactions were legal.