Turkey's currency plunges 3.5% amid ongoing feud between Washington and Ankara

Turkey’s currency fell sharply Monday as the country resumed trading after a weeklong holiday.

The lira dropped 3.5% to 6.2964 against the dollar around 8:45 a.m. ET. The currency has shed nearly a third of its value this month, breaching 7 per dollar to a fresh all-time low last week.

The lira had already been under significant pressure following the June reelection of President Recep Tayyip Erdogan, who is a proponent of unorthodox policies like cutting borrowing costs amid accelerating inflation.

As a rift between Turkey and the US widens, that selloff has accelerated. President Donald Trump doubled existing tariff rates on Turkish aluminium to 20% and on Turkish steel to 50% earlier this month after the two countries failed to make progress on a conflict over the imprisonment of Andrew Brunson, an evangelical pastor who has been detained in Turkey for nearly two years.

The Trump administration also imposed sanctions earlier this month on Turkey’s minister of justice and minister of interior, whom the White House said played “leading roles” in the arrest and detention of 50-year-old Brunson. He was arrested in Izmir in 2016 for allegedly aiding a failed military coup, accusations the pastor denies.

Jameel Ahmad, head of currency strategy and market research at FXTM, said fears of a widening current account deficit and an expected jump in inflationary pressures are also leaving investors on edge.

“I personally expect the lira to remain under pressure for some time as the same structural concerns that terrified traders away from Turkish assets still remain unchanged,” Ahmad said.

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