Turkish Lira plunges to record low against dollar amid political uncertainties, security concerns

The Turkish Lira weakened to a fresh record low against the dollar at 2.86 on Aug. 17, as investors' concerns about the growing prospect of an early election and an escalating conflict between Ankara and Kurdish militants continued. International operations to contain the Islamic State of Iraq and the Levant (ISIL) has also triggered pressure over Turkey's currency, which has already been hit with a couple of other emerging currencies after a series of yuan depreciations and ahead of a possible rate hike by the U.S. Federal Reserve (Fed).  

Speaking at a meeting in Istanbul, Economy Minister Nihat Zeybekci, said the plummeting lira was "not a cause for concern" given the nature of Turkey's overall debt structure. He warned against intervention, saying the market "would reach its own level." 

"In order to be able to reach cheaper sources, interest rates should have been lower than their actual levels. But we do not expect a decrease in rates as the Central Bank's hands are not so powerful now," Zeybekci said after a meeting in Istanbul on Aug. 17, as quoted by Reuters. 

The plunge in the lira will affect companies with open positions or with revenue in lira and debts in foreign currencies, Zeybekci acknowledged.

"But there is nothing to feel concerned about in Turkey right now ? We need to calm down. The markets will find their balance. Although companies that cannot build such balances will likely be harmed, I believe this situation is temporary," he said. 

The Central Bank's meeting on Aug. 18 will be widely watched as markets await Governor Erdem Ba?ç?'s possible moves in rate policy amid a continuing plunge in the lira's value, which has lost over 18 percent of value so far this year. The currency has been the second...