Turkish lira plunges to 6-month low as possibility of new election in İstanbul lingers

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A picture taken in Istanbul on May 23, 2018 shows Turkish lira and US dollars banknotes. Turkey's embattled lira on May 23, 2018 hit new historic lows against the US dollar after suffering a hammering in Asian trade, as markets watched to see if the central bank takes emergency action to buttress the currency. / AFP PHOTO / OZAN KOSE

The value of the Turkish lira plunged on Thursday to 5.85, the lowest in six months against the US dollar, as Turkey’s ruling party requested a new election in İstanbul and relations with the US were further strained over Turkey’s purchase of a Russian S-400 missile defense system, the T24 news website reported.

The lira stood at 5.33 to the dollar on March 26.

The Financial Times reported on Thursday that Turkey’s central bank had bolstered its foreign currency reserves with short-term borrowed money, leading to concerns that Turkey may not be able to defend itself in the event of a currency crisis.

The report raised concerns among finance experts about the country’s durability against a currency crisis, which last summer led to a significant loss in value of the national currency.

According to many experts, Turkey has been in recession since then, with high inflation and high interest rates, the second highest in the world after Argentina.

The value of the lira also moved significantly downward after a speech given by President Recep Tayyip Erdoğan, who criticized the Financial Times report, claiming that the daily depicts the Turkish economy as teetering on the brink of collapse.

Meanwhile, the US maintained its firm stance against Turkey’s purchase of the Russian air defense system, which according to Washington jeopardizes the security of the American F-35 stealth jets that Ankara has purchased.

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