U.S. Markets closed

Turkey's lira is rallying after a $15 billion loan from Qatar

Oscar Williams-Grut
erdogan 2018 08 13 .JPG

REUTERS/Umit Bektas/File Photo



The Turkish lira continued to retreat from its historic low against the dollar on Thursday after Qatar announced a $15 billion funding package for Turkey's wobbling economy.

The dollar is down 2.5% against the lira to 5.8052 at 8.12 a.m. BST (3.12 a.m. ET) on Thursday morning. It follows a surge over the last week and a half that saw the dollar climb to over 7 lira at its worst.

The latest strengthening of Turkey's currency comes after Qatar announced a $15 billion funding package for Turkey late on Wednesday evening.

Tamim bin Hamad Al Thani, the Amir of Qatar, tweeted: "Today, in the framework of important negotiations with His Excellency President Erdogan in Ankara, we announced a package of deposits and investment projects worth $15 billion in this country, which has a productive, strong and robust economy."

Turkish President Tayyip Erdogan tweeted: "On behalf of the Turkish people, I sincerely thank Sheikh Tamim and the Qatari people for standing by Turkey. There is no doubt that our strong relations with the friendly and brotherly state of Qatar will continue to evolve in many areas."

Turkey's currency has come under pressure due to rising diplomatic tensions and cooling trade relations with the US, Erdogan's perceived control over the country's central bank, and a strong US dollar. Erdogan has accused the US of waging an economic "war" against the country.

The lira pressure began to ease on Monday when the Turkish central bank promised it would take "all necessary measures" to protect the economy. Turkey's banking watchdog on Wednesday also moved to crack down on shorting of the lira.

Hussein Sayed, the chief market strategist at FXTM, said in an email on Thursday: "Such measures may only provide short-term relief and policymakers need to address the longer-term challenges that will face the country.

"With inflation expected to skyrocket in the coming months, a current account deficit that exceeds $50 billion and more than $16 billion of debt maturing in 2019, investors fear that the currency crisis will turn into a debt crisis.

"Even if tensions between the US and Turkey are resolved, investors still need to see serious fiscal and monetary measures to restore confidence."

NOW WATCH: How a Wall Street chief strategist's Costco shopping experience explains the biggest misconception about global trade

See Also:

SEE ALSO: Turkey's central bank promises 'all necessary measures' to save its financial system amid lira collapse

DON'T MISS: The lira surged 7% after Turkey hit back at US 'attacks' by slapping American cars, alcohol, and tobacco with huge tariffs