Investing.com - The Turkish lira stabilized while the U.S. dollar slipped on Tuesday as Turkey’s central bank promised to save the country’s financial crisis.
Turkey’s central bank announced on Monday a series of measures to offer liquidity and cut reserve requirement for banks, in a bid to saving lira from its crisis driven by the U.S. sanctions and doubled tariffs on silver and aluminum for 50% and 20% respectively.
Equity markets slumped while investors seek refuge in safe haven currencies including the U.S. dollar and gold despite attempts by Turkey’s central bank to halt the crisis.
“Turkey is faced with an economic siege. We are taking the necessary steps against these attacks and will continue to do so,” President Erdogan said on Monday.
Finance Minister Berat Albayrak, Erdogan’s son-in-law, said Sunday said that Turkey would implement an economic action plan, but did not give details on what the steps would be.
The lira last traded around 6.90 against the greenback, after dropped to a fresh all-time low of 7.24 earlier in the day.
"The decline in the lira is multifaceted, caused not only by a weak external position in terms of current account deficit and inadequate currency reserves, but also the challenging political environment which exacerbates the vulnerabilities in the lira," Kerry Craig, global market strategist at J.P. Morgan Asset Management, wrote in a recent note.
Meanwhile, the dollar rose against its rivals, but gains were capped as the euro eased from a 13-month low.
The US Dollar Index, which measures the greenback against a trade-weighted basket of six major currencies, slipped 0.07% to 96.32.
More than 90% of traders expect the Federal Reserve to raise rates as soon as September, with another rate hike seen in December.
Elsewhere, the Chinese yuan edged higher, with the USD/CNY pair slipped 0.06% to 6.8822. Charles Feng, head of macro trading for Greater China at Standard Chartered (LON:STAN) Plc said “the worst of the plunge in China’s yuan should be behind us.”
The Chinese currency slid 8% against the dollar in the last three months and is Asia’s worst performing currency.
The USD/JPY pair rose 0.15% to 110.88 on Tuesday.