Volatile Turkish lira skids to record low vs euro

Credit: REUTERS/MURAD SEZER

Turkey's lira skidded for a fourth day on Wednesday to a record low against the euro in volatile trade, after the central bank governor downplayed concerns over depleted reserves and stuck to what some see as an over-optimistic view on inflation.

Updates prices with record low vs euro

ISTANBUL, July 29 (Reuters) - Turkey's lira skidded for a fourth day on Wednesday to a record low against the euro in volatile trade, after the central bank governor downplayed concerns over depleted reserves and stuck to what some see as an over-optimistic view on inflation.

The bout of selling comes after the lira traded in a very narrow range around 6.85 against the dollar for two months. But a brief plunge late on Monday set off renewed activity in the currency, which is at its lowest level since mid-May.

The lira TRYTOM=D3 was down some 0.2% at 6.9525 against the dollar by 1442 GMT, after earlier hitting 6.9850. Its record low was set on May 7 at 7.269.

Measured against the euro, the currency EURTRYD3=R slipped to a historical low of 8.2088. Istanbul's main BIST100 share index .XU100 was down 2%.

Data and sources show the central bank and state banks have sold billions of dollars to keep the lira stable, and traders calculate these interventions amounted to some $110 billion since they began early last year including heavy selling in the last two months.

Concerns have simmered over a resulting drop in the central bank's gross reserves to $49 billion from $81 billion so far this year, as well as over Turkey's stubbornly high inflation.

Central Bank Governor Murat Uysal said at a briefing that reserves naturally fluctuate during times such as a pandemic, and he repeated that inflation would decline as soon as this month, sooner than most economists expect.

"It's hard not to be negative on Turkey given the central bank's credibility problem, a complicated geopolitical situation, and a weak fundamental starting point," said Win Thin of Brown Brothers Harriman.

(Reporting by Ali Kucukgocmen; Editing by Jonathan Spicer)

((ali.kucukgocmen@thomsonreuters.com , @alikucukgocmen; +902123507067; Reuters Messaging: Reuters Messaging: ali.kucukgocmen.thomsonreuters.com@reuters.net))

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