Turkey’s lira retreated from a record low of 7.24 to the dollar on Monday after the central bank promised to provide liquidity and slash reserve requirements for Turkish banks. However, its meltdown continued to rattle global markets.
The Turkish lira has lost more than 40 percent of its value against the dollar this year, mostly over worries about President Tayyip Erdogan’s influence over the economy, his repeated calls for lower interest rates, and unhealthy ties with the United States.
Last Friday, the currency’s deep plunged turned into a free-fall, with the lira dropping as much as 18 percent, sapping US and European stocks as investors became jittery over banks’ exposure to Turkey.
The fresh lira crash on Sunday night hit Asian shares and weakened South Africa’s rand and drove demand in global markets for safe currencies, which include the dollar, Swiss franc, and yen. Shares in the European banking sector were also disrupted, losing much ground.