Turkish loosened foreign currency reserve requirements Tuesday in a move to inject roughly $1.5 billion into financial markets, but the iShares MSCI Turkey exchange-traded fund (TUR) reached a new 52-week low as the Turkish lira weakened against the dollar.
The lira was weaker by 2.2% Tuesday against the U.S. dollar, and has slipped more than 20% over the past 12 months. The Turkey-invested ETF was down 1.8% in recent trading, and is down nearly 12% over the past year. Shares of Turkcell (TKC) fell 1% Tuesday and are down 15% over 12 months.
The bank intervention was not enough to overshadow Turkish parliament debate Tuesday on constitutional change that would give President Recep Tayyip Erdogan even more power. The president has discouraged the central bank from raising interest rates to boost the economy; it held them steady in December. The central bank this week promised additional steps “may be taken in order to maintain prices stability and financial stability.
After a failed coup in July, Turkey remains in a state of emergency that has given the government more power in arresting, detaining or firing thousands of citizens as it investigates the forces behind the attempted government overthrow. The result was the first economic contraction in seven years, in the quarter ended in September. Turkey also is battling domestic terrorism; the recent escalation included a deadly attack at an Istanbul nightclub at New Year’s, and the assassination of the Russian ambassador to Turkey in December.
The Wall Street Journal said in a profile of Erdogan in December:
“… Since July, more than 125,000 mostly public employees have been purged, including 40,000 who are under detention. The government of Mr. Erdogan has closed more than 169 media outlets during the same period. It has jailed the entire top leadership of a pro-Kurdish political party that won six million votes in an election last year. Mr. Erdogan delivers daily hourlong speeches, which television stations that haven’t been shut down uniformly broadcast live …”