The Turkish lira skidded to record lows against the US dollar, euro and pound on Monday amid concerns Turkey could get more involved in a fast-escalating conflict in the Caucasus, despite last week’s surprise rate increase meant to support the currency.
The Turkish lira slid 2 percent against the dollar and was on track for its worst day since early August when the latest bout of selling began hitting the currency that has shed half its value in less than three years.
The selloff erased the gains made during a rally late last week after Turkey’s central bank unexpectedly raised interest rates by two percentage points to 10.25 percent – the first interest rate increase in two years – to stabilise the lira and address inflation.
But analysts who applauded the monetary policy pivot said the currency came under new pressure after heavy fire between Armenia and Azerbaijan over the disputed region of Nagorno-Karabakh, marking their worst clashes since 2016.
