Turkish Lira Drops to Record Low Against Dollar

ANKARA (AP)–Turkey’s currency slid to a record low against the dollar on Friday, due to simmering tensions in world stock markets and worries about the effect of the global financial crisis on the country’s economy.

The Turkish lira weakened to 1.7900 against the dollar at midday Friday, after closing at 1.7520 on Thursday.

Experts said the currency’s fall was due to the shake-up in financial markets–driven this week by fears of more major companies collapsing, particularly in the U.S.–which is driving investors away from the higher-risk emerging markets such as Turkey.

"It is the result of developmen’s concerning General Motors and the global crisis that has been ongoing for some time," Industry and Trade Minister Zafer Caglayan said of the lira’s plunge against the U.S. currency.

A warning from struggling automaker General Motors Corp. that it may have to file for bankruptcy has shaken world markets, including that of Turkey, where two-thirds of the stock market players are believed to be foreigners.

The Turkish lira has weakened some 15 percent against the dollar since the start of the year.

Friday’s record low was below the previous trough reached in March 2003, when the currency traded at around 1.7700 against the dollar.

The currency’s weakening position is likely to deepen concerns about Turkey’s economy. On Thursday, an influential group of the country’s top business figures again urged the government to reach a new loan deal with the International Monetary Fund to limit the fallout of the global crisis.

Prime Minister Recep Tayyip Erdogan has been holding out against a new loan arrangement, saying some conditions attached to the loan are unacceptable. Talks for a possible new loan were suspended last month.

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