Turkish lira Stabilizes; U.S. Dollar Slips

Tuesday,   14-Aug-2018   03:06 PM (IST)

The Turkish lira stabilized while the U.S. dollar slipped on Tuesday as Turkey’s central bank promised to save the country’s financial crisis.Turkey’s central bank announced on Monday a series of measures to offer liquidity and cut reserve requirement for banks, in a bid to saving lira from its crisis driven by the U.S. sanctions and doubled tariffs on silver and aluminum for 50% and 20% respectively.Equity markets slumped while investors seek refuge in safe haven currencies including the U.S. dollar and gold despite attempts by Turkey’s central bank to halt the crisis.The lira last traded around 6.90 against the greenback, after dropped to a fresh all-time low of 7.24 earlier in the day.The decline in the lira is multifaceted, caused not only by a weak external position in terms of current account deficit and inadequate currency reserves, but also the challenging political environment which exacerbates the vulnerabilities in the lira.Meanwhile, the dollar rose against its rivals, but gains were capped as the euro eased from a 13-month low.The  US Dollar Index, which measures the greenback against a trade-weighted basket of six major currencies, slipped 0.07% to 96.32.More than 90% of traders expect the Federal Reserve to raise rates as soon as September, with another rate hike seen in December.Elsewhere, the Chinese yuan edged higher, with the USD/CNY pair slipped 0.06% to 6.8822.The Chinese currency slid 8% against the dollar in the last three months and is Asia’s worst performing currency.The USD/JPY pair rose 0.15% to 110.88 on Tuesday.