UPDATE 2-Turkish lira briefly touches new record low

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(Update adds Lira moves, comments and background)

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ISTANBUL, Oct 8 (Businesshala) – The Turkish lira hit a record low against the dollar on Friday, fueled by concerns about monetary policy credibility as well as the underlying strength in the dollar.

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The lira stood at 8.93 at 1013 GMT, recovering some of its losses from a new all-time low of 8.9750, but is still 0.5% weaker than Thursday’s close of 8.8800. The currency has weakened 16% against the dollar this year.

Bankers said the lira’s weakness was due to a Businesshala report, citing sources, that said President Tayyip Erdogan was losing confidence in the central bank governor on monetary policy direction. The US currency is also strengthening due to rising US bond yields.

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Traders said Erdogan’s communications director Fahrettin Altun said on Twitter that the Businesshala report was “fake news” that was not described in detail, leading to some recovery in the lira.

The US dollar index rose marginally to 94.291, not far from its 12-month high of 94.504 at the end of September. Traders are also awaiting US payroll data for September.

Last month Turkey’s central bank unexpectedly cut its policy rate by 100 basis points to 18%, which analysts said was further evidence of political interference by Erdogan, a self-described foe of interest rates.

Data after the rate cut showed that annual inflation had hit a two-and-a-half-year high of 19.58 per cent in September. (Written by Ezzie Erkoyan and Darren Butler; Editing by Dominic Evans and Toby Chopra)

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