Turkish lira continues to slide despite central bank intervention in currency market

ANKARA, Turkey – Turkey’s currency, the lira, continued its downward slide on Thursday despite the central bank’s intervention in the foreign exchange markets to support it.

The lira weakened to a record 2.30 against the dollar just hours after the central bank said in a statement that it was intervening in the markets due to “unhealthy price occurrences.” It did not give further details, but the Hurriyet newspaper and other reports said the bank had sold more than $2 billion to shore up the lira.

The Turkish currency has been falling steadily amid concerns that a bribery and corruption scandal that has ensnared people close to Prime Minister Recep Tayyip Erdogan might destabilize the government.

This week, the central bank decided against supporting the lira with an interest rate increase, a decision some analysts said was taken under pressure from the government.

The fall in the lira seemed to worry investors, who pushed the main stock index in Istanbul down 2.9 per cent.