Lira crisis: action by Turkey's central bank fails to quell contagion fears
Euro falls to one-year low as investors worry lira's crash could infect European markets
- How serious is lira crisis and what are the implications?
- Turkish lira crisis: contagion fears hit markets - business live
The Turkish lira was under severe pressure on Monday as an intervention by the country's central bank, and defiant words from president Recep Tayyip ErdoAan, failed to to quell investors' fears that the country's financial crisis could spread to European markets
The lira pulled back from a fresh record low overnight, when it fell around 9% to 7.2 lira against the dollar, after the central bank pledged to provide liquidity for Turkish banks and give them more breathing space by cutting their lira and foreign currency reserve requirements.The euro was also hit a one-year low against the dollar, reflecting fears of contagion for the European banking sector.
Over the past five years, Turkey's growth has been virtually keeping pace with that of China and India, but is now displaying the classic signs of overheating: a large current account deficit, a construction boom and soaring debt.
Related: Q&A: Why is the Turkish lira in freefall and should we worry?
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