Turkish Lira Crashes To All Time Lows, Biggest Drop Since Failed Coup Attempt

Tyler Durden's picture

The relentless dollar rally continues to slam the Turkish lira, which has been printing fresh all time lows on a daily basis, and today has been no exception, tumbling over 1.8%, and pushing the USDTRY to an all time high above 3.50.

Source: BBG

The collapse is driven by numerous factors: the rally in oil, the strength in the U.S. dollar, the surge in global bond yields, ongoing political uncertainty, signs of weakening economic growth from macro indicators are all weighing on the currency as well as Turkish stocks, which were down over 2%, making them underperformers among peers, according to Gulsen Ayaz, director of institutional sales at Istanbul-based Deniz Invest. Historically, Turkey has been sensitive to rising oil prices, with its high current account deficit having recently benefited from the slump in commodity prices which now is reversing.

According to Morgan Stanley there is little to look forward to for Lira bulls: the bank expects the Lira to hit 3.60 per dollar in about 6 months, and 3.70 by the end of 2017.

“This forecast is at the bearish end of the range of forecasts currently published by Bloomberg, though we expect the consensus to shift towards our forecasts soon... “Risk remains that these forecasts are hit earlier than expected.” Indeed, at this rate 3.60 may be hit by the end of the week.

Morgan Stanley also writes that the government's moves to encourage replacement of FX contracts with liras “address the symptoms of the underlying problems affecting the currency, rather than addressing the causes of currency weakness."

If the drop is not halted, the lira may fall as much as 2%, which marks the worst single daily drop for the Lira since the failed coup in July.

However, it is unclear just how Turkey can arrest the drop: last week the Turkish central bank hiked rates for the first time in over two years, defying pressure from Erdogan who has been pressuring it to lower rates, to prop up the currency. However, as the chart above shows, it has yet to have any impact.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wang Dang SP's picture

I had enough turkey last week. 

Ghost of PartysOver's picture

Hmmmm, is Trump screwing the Turks?  And with out any military intervention?  Should China be concerned?  Stay tuned.

Wang Dang SP's picture

The negotiations are just beginning. I'm sure Vlad is printing up some extra rubles to just to cover his bets.


BetaGap's picture

After Thanksgiving the Turkey is worth nothing for at least a year.

SomethingSomethingDarkSide's picture

Probably the only thing in the world I would buy from Turkey is the Cure for Cancer, and boy-oh-boy do I think they are too dumb to create that.

mkkby's picture

Strong dollar = great time to visit Turkey...  Except it's fucking Turkey. 

Ain't that always the case?

The central planners's picture

With eastern Aleppo being liberated and this the ErPIGan pipedream to rebuild the ottoman empire its fading appart.

LawsofPhysics's picture

King petrodollar!!!

same as it ever was...

hotrod's picture

Dollar owns THE WORLD. 

SomethingSomethingDarkSide's picture

Who runs the world?  GIRLS.

Disobey Queen B at your own peril.

Dangerclose's picture

I think this is "frontrunning" a Saudi riyal devaluation.

buzzsaw99's picture

let's compare yields of say italy (2%) to turkey (11%). both have falling currencies but at least turkey controls their own currency. not saying lira bonds are a good investment just saying put a gun to my head and make me choose and i know which one i'm buying.

LawsofPhysics's picture

Hey look, the NSA junk monkey is back.  American tax dollars hard at work!

hooligan2009's picture

turkey is a facist moslem dictatorship that is about to invade syria and go hand to hand with russia.

it either has or used to have US nuclear missiles. israel better pray that it doesn't get a fat finger.

right now, because of syria, world war III is coming to the boil

somebody was backing hillary to start a war with russia, now somebody is backing erdogan.


answers on a postcard to tel aviv please

NoWayJose's picture

Erfogan envisions a Muslim Caliphate with himself in charge. He may get part of his wish, but Iran is more likely to be the one in charge!

CNONC's picture

SAA will fully control Alleppo by later this month. It is unlikely any insurgent groups backed by the US can survive this loss. Mosul campaign is likely designed to drive .ISIS fighters back to Syria to continue anti Assad insurgency after defeat of FSA and Al Nusra. The question is, will the US, KSA, Qatar, and Turkey (all with different agenda) simply accept the defeat of their various proxies? If not, direct confrontation with Russia seems inevitable. I suspect Russia sees this as a must win scenario, so will not back down. I think the Turks are in a similar position. This will not end with a restoration of peace in Syria.

Jdhank's picture

-What do nation-states do when their economies and currencies are failing?  They take you to War to shift attention to their new Enemy ("it's all their fault").

If Erdogan goes all out with an invasion of Syria, the Russian & Iranian militaries will likely skull-drag Mr Erdogan.

Greece will be a beneficiary...Constantinople not Istanbul.


NordikAvenger's picture

I love how the same meatheads say the same dumb thing. Yeah, right....rename Istanbul to Konstantinopolis and return it to the greeks. Brilliant idea. And then do what with the 14 million people living there? Nicely ask them to go back to where they came from?


OliverAnd's picture

There are 14 million living on both sides; European and Asian sides.  Turks are not Europeans and while you claim a mass migration is not a brilliant idea, the Turks did exactly that to the Greeks.  Those Greeks that tried to remain were either killed or eventually forced to leave.  Konstantinople is Greece's capital city; not Athens as it had no other choice.  It once controlled over 75% of the world's wealth; in some ways like New York City.  Would you find it acceptable if Canadians attacked the US and took New York City?  That is exactly what the Turks did.  

Since Turkey's foreign policy varies from month to month, both Russia and NATO members cannot trust Turkey.  In fact during the Cold War Turkey had been spoiled from both sides.  This cannot continue.  Iraq, Kuwait, Yugoslavia, Cyprus, Lebannon, Palestine/Israel conflicts all stem back to the Ottoman Turks.  If the Dardanelles fell under Greek authority, it would allow for greater stability in the region helping to minimize migration from the Middle East. It would also minimize Turkish migration into Western European nations that are swamped by Turks.  Not only would Turkey be excluded from Europe politically, it would now be also excluded geographically.

NordikAvenger's picture

All i say to you is "good luck" dislodging 14 million Turks from the area.

You live in a childish fantasy world. By the sound of it, you must think the Zionist project in Palestine was a good idea executed badly.

BTW, you are a racist too. Turks have been living in Europe for over 700 years. That makes them European as well as being Asian.

NordikAvenger's picture

I sense deep Hate in this one....

NordikAvenger's picture

Your recounting of history is disingenuous and not in good faith. The population exchange in 1922 went both ways. Muslims in Greece were labelled Turks and were forced to leave just as much as Christians in Anatolia were labelled as Greeks and were forced to leave. For every 2 christians deported from Anatolia 1 muslim left Greece.

So stop being a jerk and quote what happened correctly.

Catullus's picture

Still don't understand why the Fed would raise rates. Global currencies are on fire. They've made this excuse before about "imbalances".

Spectre's picture

Who gives a flying fuck about Turkey or Syria ??  Let them all kill themselves and move on with more pressing matter.

scoutshonor's picture

Looking over the headlines from around the world for this week seems like reviewing the chart of a patient in the intensive care unit with multi-system organ failue.

You get to that point where you mutter under your breath--just die already.  This one is circlIng the drain--but props for tenacity.

Maestro Maestro's picture

Mr. Erdogan,

BACK the Turkish monetary base (NOT the Turkish Lira) with GOLD.

This way neither the Tribe nor the Americans nor the Europeans can drain your gold reserves, nor crash your currency.


You want to change the world and give the finger to the above?


MIT, cumhurbaskanina iletin lutfen.

OliverAnd's picture

He has been buying gold at a record pace fot some time now and still the lira is dropping.  Imagine if he had not...

Maestro Maestro's picture

You could buy the entire gold stock extant in the world and the bankers still could manipulate lower gold's price as long as the bankers are enabled by you and everybody else to fraudulently sell gold that the bankers don't have, in the unlawful paper (futures) markets where entire yearly production of precious metals are sold by nonproducers (bankers) in the space of a few hours.  That's against commodity law and common sense.  And proof that the United States of America is a criminal State.

I don't know where Erdogan stands for a fact.  If he really were a true informed and faithful follower of Islam, he ought to abolish fiat as currency -- at the very least establish usage of gold and silver as money.  He's not done that.

Vardaman's picture

That currency is a turkey! (rimshot)

SmittyinLA's picture


More like "mock coup" as pretext for fascism, BTW what happened to the Turk extradition request?

SmittyinLA's picture

Isn't fiat unislamic?

Maestro Maestro's picture

It sure is.  And that makes the Saudis the biggest enemy of Islam for investing the proceeds of the sales of the precious oil of the Muslim lands in the Treasury Bonds of the United States of America who are the biggest abusers of Muslim populations and Muslim lands.  The Americans finance their crimes against humanity with the financial backing of the Saudis.