Turkish lira firm slightly
ISTANBUL, Sept 25, (RTRS): The lira firmed slightly on Tuesday as investors weighed up the prospect of an improvement in Turkey-US ties after US Secretary of State Mike Pompeo said he expected talks this week over the fate of a US pastor on trial in Turkey.
The lira has lost nearly 40 percent of its value against the US currency this year on concerns about President Tayyip Erdogan’s grip on monetary policy and, more recently, due to a diplomatic row between Turkey and the United States.
In August US President Donald Trump slapped additional tariffs on Turkish imports over the trial of evangelical pastor Andrew Brunson on terrorism charges. Turkey responded in kind, raising tariffs on some US imports.
Erdogan is visiting the United States this week to attend a United Nations meeting. Pompeo said on Monday that he expected talks with Turkish officials this week, during which Brunson’s fate will be discussed.
“If they can solve the (issue) with the US that will be quite a relief and we will see the dollar-lira going below 6 if this is announced,” said Jakob Christensen, head of emerging market research at Danske Bank.
“But we are seeing the challenges of a weak economy underlying and therefore we think the lira will weaken towards the dollar over the next year.”
The lira firmed to 6.1424 against the dollar by 0921 GMT, compared to a close of 6.1600 on Monday.
However, it was not clear whether the talks would lead to any improvement in relations. Turkish presidential spokesman Ibrahim Kalin told reporters in New York on Monday that Turkey’s judiciary would make a decision on Brunson and urged everyone to respect the court’s ruling. Brunson’s next trial session is set to take place on Oct 12.
The row between Ankara and Washington helped send the lira to a record low of 7.24 against the dollar in August. The currency has since rebounded with a series of measures taken to prop up the lira, including a 6.25 percentage point rate hike by the central bank and a new economy programme announced by the government.