Turkey’s lira weakened to 6.52 against the dollar on March 19, hitting its weakest level since September 2018 as the spread of the coronavirus weighed on sentiment and the U.S. currency surged globally.
In a bid to defend the economy from the coronavirus pandemic, Turkey’s Central Bank cut its key interest rate by 100 basis points on March 17 at an earlier-than-scheduled policy meeting and took steps to support volatile financial markets.
The lira has lost 8.5% of its value this year.
The dollar surged and everything else was blown away on March 18 as emergency central bank measures in Europe, the United States and Australia failed to halt a fresh wave of panic selling. Stocks, bonds, gold and commodities fell as the world struggles to contain coronavirus and investors and businesses scramble for hard cash.
President Recep Tayyip Erdoğan said on March 18 Turkey would postpone debt payments and reduce tax burdens in various sectors under a 100 billion lira ($15.4 billion) package to support the economy and lessen the impact of the coronavirus pandemic.
In August and September 2018, Turkish Lira hit record lows against the dollar when relations between Turkey and the United States significantly deteriorated over the imprisonment of a U.S. pastor in Turkey.
U.S. Pastor Andrew Brunson was arrested in the western province of İzmir in 2016 over his alleged links to the movement of the U.S.-based Islamic preacher Fethullah Gülen. His imprisonment was turned into house arrest in July 2018.
Brunson’s situation was followed closely by President Donald Trump and his administration, who repeatedly called on Ankara to release the pastor.
Erdoğan, however, said that the U.S. should extradite Gülen, the believed mastermind of the July 15, 2016 failed coup attempt, first.
Ties were further severed when the U.S. imposed sanctions on Turkey and two Turkish ministers. The sanctions prompted the lira to weaken to 7.2 against the dollar.
Following a court ruling to release Brunson, the lira returned to its previous levels.