Turkish Lira

The Lira continued in the direction of new record lows Tuesday and could fall as far as 8.50 in the months ahead if Turkey’s unorthodox approach to monetary policy goes unreformed, according to analysts at Commerzbank. who also say an International Monetary Fund (IMF) bailout could now be an inevitability for Turkish authorities.

The Lira rallied further on Friday after regulators relaxed restrictions on currency transactions following a surprise interest rate rise from the central bank, although analysts say the road toward stability is a long one and that rate setters will need to go further to prevent fresh losses befalling the Lira.

The Dollar crept higher Thursday as financial markets mulled over minutes of the July Federal Reserve (Fed) policy meeting going into a session that will also reveal more about recent European Central Bank (ECB) policy deliberations as well as the path of Turkish interest rates, all with potential implications for major currencies.

The Euro-to-Dollar rate was rallying higher Tuesday in moves that may have had more to do with keeping pressure on the Lira than with any bearish outlook for the greenback or brightening Eurozone economic story after the market was drawn into aiding a run on Turkey's currency late in July. 

The Australian Dollar edged higher Tuesday in defiance of a short-term reversal signal on the daily charts and a wobble in gold prices, although the Euro's use as an instrument of Turkish economic coercion could drive additional upside given the Aussie's inverse correlation with the Dollar Index. 

The Euro-to-Dollar rate tumbled Friday in moves widely attributed to rising geopolitical tensions, risk aversion and profit-taking ahead of the weekend, although losses could build next week and volatility increase if the Turkish Lira's latest tumble is indicative of another another currency war brewing. 

The Turkish Lira shot higher Thursday after the Central Bank of Turkey (CBRT) raised interest rates despite opposition from President Recep Tayyip Erdoğan, whose influence over the institution has contributed to the nation's 2018 currency crisis.

The Lira hit the ropes again Friday after President Donald Trump condemned Turkey's detention of Pastor Andrew Brunson and Treasury Secretary Steven Mnuchin said the US is preparing further sanctions against the government, which could tip the currency over the edge ahead of the weekend. 

The Lira rose sharply for a second consecutive session Thursday and has now reduced its 2018 loss by almost half but the currency remains vulnerable to renewed losses and some analysts are claiming it is only a matter of time before the Turkish state is forced to go cap in hand to the International Monetary Fund.  

The Turkish Lira fell to a new record low amid fresh global market turmoil Monday after President Recep Tayyip Erdogan resisted calls to raise interest rates and support a collapsing currency, leading markets to fear that a currency crisis could soon turn into an all-out financial crisis. 

Lira makes fresh historic low after failure of country's delegation to resolve impasse with Washington, one analyst believes Turkey may need to approach the IMF or seek other external support.