Recep Tayyip Erdogan tells Turkey to 'trust in God' as lira falls

  • Recep Tayyip Erdogan tells Turkey to 'trust in God' as lira falls

Recep Tayyip Erdogan tells Turkey to 'trust in God' as lira falls

Turkey's currency hit a record low against the United States dollar and euro early on Friday, falling around 7% against the dollar after initially losing 12%.

Concerns were intensified Friday by a report in the Financial Times that the supervisory wing of the European Central Bank (ECB) had over the last weeks began to look more closely at eurozone lenders' exposure to Turkey.

However, a defiant Erdogan brushed aside concerns, telling a roaring crowd of Turks in the Black Sea city of Rize not to worry.

Ankara has accused the US of moving far too slowly to process the extraction of Gulen to face justice in Turkey for the defeated coup attempt, which left 251 people martyred and almost 2,200 injured.

"Many of these European banks have their own non-performing loans and liquidity issues to deal with themselves".

"Investors have been looking at the unfolding currency crisis in Turkey as a local difficulty, however the accelerating speed of the declines appears to be raising concerns about European banks exposure to the Turkish banking system", said Michael Hewson, chief market analyst at CMC Markets UK.

The MSCI All-Country World index, which tracks shares in 47 countries, was down 0.6 percent on the day, having erased all its gains for the week.

The lira pared some of its losses to trade at 5.9646 against the dollar at 0745 GMT, down 5.5 percent, after slumping as much as 14.6 percent to hit an all-time low of 6.4915 in early trade, according to Reuters data.

The dollar index.DXY, which measures the greenback's strength against a group of six major currencies, breached the 96 level, taking it to its highest level since July 2017.

The Australian dollar, often viewed as a gauge of global risk appetite due to its reliance on commodities, was the biggest faller among developed currencies, at one point down 1 percent on the day.

Adding to emerging market currency woes was the Russian rouble, RUBUTSTN=MCX weakened to 67.12 to the dollar. "Don't forget this: if they have got dollars, we have got our people, our right, our Allah", he was cited as saying.

Spot gold rose 0.1 percent to $1,213 per ounce.