Recently hailed as one of the fastest growing economies in the world, this past week the Turkish economy took a sharp nosedive with the lira (₺), Turkey’s national currency, losing 25% of its value against the US dollar.
The downturn comes off the back of the country’s overwhelming positive Q2 results that reported a 7.22% rise in gross domestic product (GDP). So what caused this sudden plunge?
This drop in the value of the lira is especially problematic for the nation as it will be more expensive for Turkey to repay its dollar denominated debts. However, the question many in the financial world are asking is how will this affect the global economy?
Across the board, the US dollar has experienced rises against major world currencies. The latest result have shown a strengthening USD against the British pound, a trend ongoing since April, and more dramatically against the euro, giving the worst levels of EUR/USD since July 2017.
However, with the Greek economic crisis still in recent memory, many Forex traders remain cautious about the dollar uptrend and continue to watch major financial releases – including UK inflation, data due on Tuesday, and Europe’s data, set to be released on Friday – for clues whether the trend will continue or is just a temporary blip.