Negative growth in the third quarter and consumer confidence near record lows in December also dragged on the outlook.
Furthermore, the increased security risks also pressured investors’ outlook, notably the Islamic State claimed that the New Year’s attack at the Reina nightclub shortly after Istanbul rang in the new year.
“Market participants are looking for signs that the central bank is taking the inflation threat seriously,” Henrik Gullberg, a strategist at Nomura, told Bloomberg, predicting the lira would fall past 4.00 in the first six months of the year. “Until we see aggressive policy tightening, similar to early 2015, the lira will continue to sell off on bad news like the terrible terror attack, whilst not appreciating back when sentiment is more supportive.”
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