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Kristina Frunze

9 August 2018

Forex

Turkey US Tension affects Turkish Lira

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Turkey US tension affects Turkish Lira, causing the Turkish currency to drop 3 percent to TL5.4364 against the USD. In the meantime, Russian Ruble is also suffering losses, falling to 66.24 against the greenback. What has caused such a turbulence?

9 August, AtoZ Markets – It appears that Russian and Turkish currencies are under the pressure from the situation concerning US political moves. 

Turkey US Tension affects Turkish Lira

Heightening geopolitical tensions with the US have fueled selling in the Turkish lira and Russian ruble on Thursday morning. The US government has reportedly exercised its financial powers towards Russia and Turkey. Yury Safronau, the Chief Currency Strategist at AtoZ Markets, stated:

"On Thursday Turkish lira lost more than 3% of its value against USD. During London trading session USD/TRY was trading at 5.4475, the new historic high. As of now TRY selling is still going on. USD/TRY is staying above both moving averages (50, 200 MA) and sloping upwards, although RSI and MACD indicators are showing overbought."

Following this, the Turkish lira has dropped to a new historic low in London trading, falling more than 3 percent to TL5.4364 against the USD. The previous low of Turkish lira has been recorded at TL5.4253 – the level that has been hit earlier this Monday.

Today’s movements appeared following a meeting on Wednesday, which saw the US and Turkish state department officials. Reportedly, the authorities did not reach a consensus regarding the detained US pastor. Earlier this month, the US has issued two senior Turkish government ministers with financial sanctions. 

The spokesperson for the state department, Heather Nauert, has been quoted as saying:

“We held additional talks with Turkish officials. The conversations continue.”

US Russia Sanctions

In the meantime, Russian ruble has continued its drop that has been triggered this Wednesday. That time, the Trump administration has agreed upon new sanctions against Russia following an alleged nerve agent attack. 

The ruble has dropped 3 percent on Wednesday just to fall yet another 1 percent on Thursday morning, thus trading at 66.24 against the USD. In fact, the Russian currency is down 15 percent so far in 2018, with key drops in value happening in April. Such movements in price have been caused by the sanctions on Russian business people, officials, and companies from the US side. 

According to Chief Currency Strategist at AtoZ Markets, Yury Safronau:

: "After Trump administration imposed new sanctions today, Russian ruble broke resistance line of price channel. Currency was trading inside the channel since April 2018. After sanctions were adopted ruble broke psychological resistance level 65 (upper line of price channel) and jumped to 66.5, the highest price since November 2016."

Some other factors have also played a role in regards to the valuation of Turkish and Russian currencies. These include, in part, Turkish economy’s experiencing a nearly 15 percent inflation, while investors are concerned about the central bank’s independence. The latter is due to the latest developments from the officials when they decided not to raise rates in spite of the rapid price growth. 

Think we missed something? Let us know in the comments section below. 

The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZMarketz.com, nor should they be attributed to AtoZMarkets.

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