(Bloomberg) -- As analysts scrambled to find a reason for the lira’s sudden slump early Friday, a top Turkish official offered an explanation: It didn’t really happen.
“They say it rose above 4. That’s not the case,” Cemil Ertem, a senior adviser to President Recep Tayyip Erdogan, said in a live interview with state-run TRT TV. “At night, if one gives a quote at 5, it would rise to 5. It’s so shallow, there’s no liquidity. Seeing one number in the middle of the night has no significance whatsoever.”
The lira slumped as much as 2.6 percent to a record 4.0361 per dollar at 1:50 a.m. Turkish time, during Asia trading hours. It plummeted to as low as 4.9778 per euro at the same time, also a record. The decline may have been due to stop-loss orders from Japanese retail investors holding yen-lira positions, according to Koji Fukaya, chief executive officer of FPG Securities in Tokyo.
“Yes, there’s an increase” in the exchange rate, Ertem said. “But it’s very wrong to create a perception that it went to 4.”
The lira was down 0.8 percent at 3.9668 per dollar at 12:20 p.m. in Istanbul. The currency has depreciated more than 4 percent this year, the worst performer among 10 EMEA currencies tracked by Bloomberg.
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