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Turkey Exchange Rate April 2020

Turkey: Turkish lira plunges in April on coronavirus fears

On 3 April, the Turkish lira traded at TRY 6.73 per USD. This marked a 9.3% depreciation from the same day a month prior. Moreover, the lira was down 16.4% year-on-year and 11.6% year-to-date.

The steep depreciation partly reflected a rush to safe-haven assets such as the U.S. dollar due to fears over the economic fallout of the Covid-19 pandemic on the fragile Turkish economy. The lira’s decline against the USD was, however, further intensified by country-specific factors, such as large private-sector external debt payments due over the next year relative to foreign exchange reserves—and a relatively high rate of dollarization of domestic deposits.

Going forward, the Turkish lira is expected to continue to depreciate against the USD this year amid risk aversion among investors and capital outflows due to external debt repayments and a twin deficit. Moreover, the Covid-19 pandemic will continue having a notable bearing on the lira’s fortunes, and depreciation pressures could intensify if Turkey’s exports suffer due to collapsing external demand.

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