Turkey’s lira slid to its lowest level in more than a month against the dollar on Monday over concerns about Ankara’s planned incursion in north Syria and a warning from President Donald Trump that he could “obliterate” the Turkish economy.
Investors have been closely watching tense ties between Ankara and Washington in recent months, with the NATO allies at odds over a range of issues, including policy differences in Syria and Turkey’s purchase of Russian missile defense systems.
Turkey has repeatedly threatened to carry out an incursion against the US-backed Kurdish People’s Protection Units (YPG) in northeast Syria, accusing the United States of stalling efforts to establish a “safe zone” there along the Turkish border.
Following a phone call between Trump and Turkish President Recep Tayyip Erdogan, the White House said on Sunday US forces would not support Turkey’s incursion and would leave the area.
On Monday, Trump threatened to “totally destroy and obliterate” the Turkish economy if Turkey took any action he considered “off-limits”.
The lira declined more than 1.6%, trading at 5.795 at 1600 GMT, after closing at 5.7000 on Friday. Earlier, it slipped as far as 5.8195, its weakest level since September 3.
“While the statement from the United States gives a green light to the military operation in Syria that Turkey has mentioned for a long time, it leaves many question marks regarding how the process will develop,” said a forex trader, who did not want to be named.
Turkey’s dollar bonds also fell, with the 2038 issue US900123CB40=TE down 1.3 cents.
Turkey’s lira lost nearly 30% against the dollar last year, over concerns about political interference with monetary policy, as well as a deterioration in ties between Washington and Ankara. It is down about 8% this year.
Turkey's BIST100 main share index .XU100 was down 0.45%, while the banking index .XBANK declined 1.72%.