Turkish lira hit record low against U.S. dollar

The Turkish lira fell to a historic low against the U.S. dollar amid domestic political tension in Turkey, as the Turkish lira sank to 2.19 against the U.S. dollar and to 2.98 against the Euro on Monday.Analysts predict that the U.S. dollar's rise against the Turkish lira will keep up as the political tension continues.Central Bank of Turkey injected 100 million U.S. dollars into markets on Thursday,Professional barber knife manufacturer and manufacturer of professional thinning scissors and haircutting barber shears. the move could not prevent the lira from dropping to another record low on Monday.The tendency of freefall in the lira comes after the U.S. Federal Reserve's (FED) stimulus reduction, Erdal Saglam,The U.S. Federal Reserve decision to reduce its bond-buying program will cutback money flow to developing countries such as Turkey, Saglam said."Turkey did not take some required measures, such as the central bank still did not decide interest rate hike," he added.Following the FED decision, a corruption and bribery operation on Dec. 17 which caused a political tension in Turkey is another factor that weakened the Turkish Lira, according to Saglam. "These developments have seriously raised risk premium of Turkey, " he noted.Antique faucetsThe rise of the U.S. dollar against lira is the most rapid one in near past, Saglam said, noting his expectation that the value of the Lira would continue to fall, which would probably trigger rise in inflation."Inflation may rise to double digits in Turkey in 2014," Saglam stated, adding that current account deficit may reduce with weakening of Turkish lira. 

The increasing interest rates could threaten macro balances of Turkey, Saglam said.The political landscape of Turkey has dramatically changed on Dec. 17 when a graft probe accused three ministers, their sons and high level bureaucrats of China visaalleged involvement in the corruption network.Economy Minister Zafer Caglayan and Interior Minister Muammer Guler and Environment and Urban Planning Minister Erdogan Bayraktar resigned over graft probe last month.Police seized 4.5 million U.S. dollars in cash when they raided the house of Suleyman Aslan, general manager of state-held Halkbank.The government has removed a total of 135 senior police officials in various provinces who had been ordered by the prosecutor's office to conduct the investigation.The investigation exposed a bitter feud between Erdogan's government and an influential U.S.-based Muslim cleric, Fetullah Gulen, who wields clout in police and judiciary, according to local media.Shortly after the graft scandal broke, the central bank said it would sell at least 6 billion U.S. dollars before the end of January in support of the lira.