Turkish currency, the lira, hit a record low Monday after efforts by the country’s central bank to curb the drop by reducing the amount of foreign currency it holds in its reserves and their efforts to bolster the banking sector failed.
The currency has fallen nearly 30 percent this year already and is currently down 3.8 percent against the U.S. dollar, with $1 buying about 5.277 lira, according to The Wall Street Journal.
After months of decline, the lira fell 2.2 points on Sunday after policymakers in Turkey announced adjustments to the reserve policies of the central bank — CBRT — that were supposed to result in giving the banking sector $2.2 billion in liquidity.
The CBRT claimed it would do this by lowering the “upper limit for the FX maintenance facility within the reserve options mechanism” by 5 percentage points to 40 percent, per a statement on its website.
This helped temporarily, the Financial Times reported, but the lira continued to fall.
Recent actions by the CBRT have alarmed investors who are increasingly concerned by the amount of control Turkish President Recep Tayyip Erdogan holds over monetary policy, The Wall Street Journal said.
The U.S. Trade Representative’s Office announced Friday that it would be looking into Turkey’s duty-free access to the U.S. market, which came after Turkey hit the U.S. with tariffs on U.S. goods in response to American tariffs on steel and aluminum.
U.S. President Donald Trump also hit Turkey with sanctions on Wednesday over the country’s bogus detainment of an American pastor.
“Pastor Brunson’s unjust detention and continued prosecution by Turkish officials is simply unacceptable,” Treasury Secretary Steven Mnuchin said in a statement.
“President Trump has made it abundantly clear that the United States expects Turkey to release him immediately,” Mnuchin added.
Turkish Justice Minister Abdulhamit Gul and Interior Minister Suleyman Soylu were the targets of the sanctions because they played a large role in imprisoning Brunson and “serve as leaders of Turkish government organizations responsible for implementing Turkey’s serious human rights abuse,” the statement reads.
Improving relations with the U.S. and raising interest rates, two things Turkey has so far declined to do, would help stabilize the country’s currency, analysts told The Wall Street Journal.
Turkey’s inflation rate also hit a 14-year high in June, reaching 15.39 percent.