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Turkish lira tumbles to new low against dollar


turk_liraTurkey’s embattled lira on Tuesday tumbled to a new low in value against the dollar, pressured by the possibility of the US Federal Reserve raising rates and domestic jitters ahead of June 7 elections.

The lira hit the new record low in value against the dollar of 2.67 to the greenback, a loss of in value of 0.34 percent on the day and a loss of 2.75 percent over the last five days.

The lira has lost 11 percent of its value against the dollar since the end of January.

The lira is being pressured by strong economic data from the United States and expectations the Federal Reserve could hike interest rates at its next meeting.

Against a background of slipping growth and persistent inflation, concerns are growing about the performance of the Turkish economy in 2015.

These have been amplified by President Recep Tayyip Erdogan’s conflict with the central bank who he wants to slash rates and worries about a shake-up in the economic team after the June 7 legislative polls.

Markets have been spooked by fears that Deputy Prime Minister Ali Babacan, seen as the guarantor of sensible economic policy under the ruling Justice and Development Party (AKP), could be jettisoned from the cabinet after the polls.

Prime Minister Ahmet Davutoglu refused to confirm last week that Babacan, who has to quit parliament after serving the maximum three terms allowed by his party, would stay in the cabinet.

“I have enormous respect for Ali Bey (Babacan) but there isn’t a separate body to manage the economy, there is only one government.”

“We are a team and there is only one government to which Ali Bey will definitely contribute whether he is a minister or not,” said Davutoglu.

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