Lira slide provokes backlash against opposition victory in Istanbul’s elections

Lira slide provokes backlash against opposition victory in Istanbul’s elections
Lira slide provokes backlash against opposition victory in Istanbul’s elections

The Turkish lira falls by 1 percent on Thursday as fears concerning the central bank's foreign-currency reserves reemerged, undermining gains a day earlier after Turkey's main opposition candidate took office as Istanbul mayor.

The lira slipped asfar as 5.8226 against the dollar and stood at 5.8159 at 0726 GMT. The currencytumbled nearly 30 percent in 2018 and has slipped another 9 percent this year.

The Financial Timesreported on Wednesday that Turkey's central bank had bolstered its foreigncurrency reserves with billions of dollars of short-term borrowed money, raisingfears among analysts and investors that the country is overstating its abilityto defend itself in the event of a fresh lira crisis.

"We can seewith the Financial Times story that concerns regarding central bank reserveshave increased," said a treasury desk trader at one bank.

"We cannot saythat reserves are in a very good situation but contrasting stories and commentsrecently show the subject has not been well analysed, explained andcalculated," the trader said.

On Wednesday, thelira firmed to 5.72 after Ekrem Imamoglu of the secularist Republican People'sParty became mayor of Turkey's commercial hub, ending 25 years of control byPresident Tayyip Erdogan's AK Party (AKP) and its Islamist predecessors.

The loss of controlin Istanbul was a heavy blow to Erdogan, but the AKP has appealed to electionauthorities to have the elections annulled and re-run. 

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