A man waves a Turkish flag with a portrait of modern Turkey's founder Mustafa Kemal Ataturk as he visits Anitkabir, the mausoleum of Ataturk, in Ankara. Reuters
ISTANBUL: The Turkish lira eased to 5.62 against the dollar early on Wednesday, remaining under pressure after weakening a day earlier as the United States halted delivery of equipment related to a Turkish order of F-35 fighter planes.
Washington warned that Ankara's insistence on buying Russian S-400 defence systems risked triggering sanctions. However, Acting US Defense Secretary Patrick Shanahan said he expected to resolve the dispute with Turkey over the S-400s.
The lira stood at 5.6185 against the dollar at 0427 GMT. It closed at 5.60 on Tuesday, having weakened as far as 5.68 in late trade.
The lira has also been pressured by local election results showing President Tayyip Erdogan's AK Party on track to lose control of both Ankara and Istanbul, his popularity hit by a recession, in large part triggered by the currency weakness.
The AKP submitted objections to the results in all districts of both cities, party officials said on Tuesday.
Last year, the lira lost nearly 30 per cent against the dollar on concerns over the independence of the central bank and exacerbated by worsening ties with Washington.
Washington and other NATO allies are concerned that radar on the Russian S-400 system that Turkey is buying will learn how to track the F-35, making it less able to evade Russian weapons.
A senior US official said the purchase of the S-400 risked triggering sanctions.
The row marks the latest in a series of bilateral disputes, notably over Turkish demands that the United States extradite cleric Fethullah Gulen, differences over Middle East policy and the war in Syria, and sanctions on Iran.
Turkey’s relatively low debt levels and experience at riding out financial market turbulence is helping its credit rating withstand the country’s current coronavirus
Turkey’s central bank cut its policy rate by 50 basis points to 8.25% as expected on Thursday, taking advantage of recent lira strength to keep supporting an economy that it said may be emerging from the worst of the coronavirus pandemic.
Turkey’s lira hit a record low on Friday as concerns over global inflation, an early election and a possible ratings downgrade marked the latest milestone in a years-long depreciation that has dogged the big emerging market economy.
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