Turks are concerned from demand on hard currencies

The Turkish lira plunged to a new record low yesterday, continuing a downward trend amid concerns about inflation, loose monetary policy and the depletion of foreign exchange reserves at the central bank.

Adding to the concern is a jump in demand among Turks for hard currencies and gold, costly interventions in foreign exchange markets, as well as possible sanctions from the European Union due to tensions between Turkey and Greece in the eastern Mediterranean, according to "Reuters".

The Turkish lira fell 0.4 percent to 7.4641 against the US dollar by 16:00 GMT, compared to 7.4410 at the close last Friday. Earlier yesterday, the lira recorded 7.4650, its weakest level ever, and more than 20 per cent lower than its level at the beginning of the year.

In addition, gold fell yesterday, with the dollar achieving gains, but economic uncertainty prevented it from falling further as investors awaited developments from central banks.

According to "Reuters", gold fell in the spot market 0.1 percent to 1929.87 dollars an ounce by 12:28 GMT. Gold rose in US futures trading 0.1 percent to 1935.10 dollars an ounce.

The US markets are closed for the Labor Day holiday, so trading volumes are likely to be weaker than usual.

"The rise of the dollar is putting pressure on gold, while the longer-term uncertainty is still plaguing the market to support prices," said Carsten Menke, an analyst at Julius Baer.

The dollar index rose 0.3 percent, which raises the cost of gold for holders of other currencies.

Central banks have reduced interest rates to confront the coronavirus crisis and earn gold more than 27 percent since the beginning of the year, as low interest rates reduce the opportunity cost of owning the yellow metal, which does not generate a return.

As for the other precious metals, silver fell 0.3 percent to $ 26.80 an ounce, platinum rose 0.3 percent to $ 897.40, and palladium rose 0.2 percent to $ 2,302.44.

The euro’s exchange rate stabilized against the dollar above $ 1.18 yesterday, as traders evaluate the latest US jobs data and prepare for the European Central Bank’s meeting on Thursday to see whether policymakers will provide more stimulus or not.

The dollar tumbled to its lowest level in more than two years against the euro at the beginning of September, as investors were concerned about the recovery of the US economy and bet that US interest rates would remain low for a longer period at a time when policymakers created a large fund for recovery in Europe.

But the US currency stabilized in the past few sessions, especially after the euro briefly touched the $ 1.20 level, and this was followed by selling in the single currency.

Yesterday witnessed a quiet start to the trading session, and the euro settled in the last transactions at $ 1.1841, little changed during the session, while the dollar index was unchanged at 92.875.

Analysts say the violent decline in US stocks last week also spurred dealers to adjust their positions in the dollar.

The British pound was the biggest move, dropping 0.5 percent after reports said Britain had threatened to cancel a deal to secede from the European Union. The British currency fell 0.5 percent to $ 1.3218, while against the euro it touched its lowest level in a week at 89.605 pence.

The Chinese yuan was little changed in foreign trade, and it was recorded in the latest transactions of 6.8334 for the dollar, after yesterday's customs data indicated that the country's exports recorded the strongest rise since March 2019, while imports decreased.