The Turkish lira has crashed to record lows against a number of currencies, including the Australian dollar, following the latest terrorist attack in Turkey.
While some financial observers attributed some of the fall to a higher-than-expected inflation rate, others cited growing security concerns after the New Year’s Eve Istanbul nightclub terror attack.
Police throughout Turkey are hunting the perpetrator. The gunman, said to have been dressed as Father Christmas at one stage, repeatedly fired at revellers with a self-loading assault rifle, leaving 39 people dead and many more injured. The attack was claimed by the Daesh terrorist group (also known as IS, Isis and Islamic State).
While Turkey remains a highly popular tourist destination, repeated terror attacks deter tourists. This was the pattern seen in France last year.
The decline of the Turkish lira over the past year reflects longer term economic trends as well as the wave of deadly attacks in Turkey and an attempted coup there in July.
As the lira slumps, the Australian dollar has gained 19% against the Turkish currency in a single year. It has gained 28% against the lira over the past two years.
In February last year, it took 48.5 Australian cents to buy a Turkish lira. By July last year it took just 45 Australian cents. Yesterday, it took a mere 38.5 Australian cents.
The lira has also crashed to record lows against the American dollar, having lost 35% of its value against the greenback over the past two years. Consumer prices in Turkey leapt by 8.5% in December, compared to the same month in the previous year, which has not helped the currency.
Chart from foreign exchange site xe.net shows plunge in value of Turkish lira against Australian dollar in past couple of days
Bargain exchange rates mean lower tour prices, making Turkey more attractive to visitors. But terrorism turns tourism off, which is what the terrorists are aiming at.
Australia’s Department of Foreign Affairs and Trade (DFAT) advises Australians visiting Turkey to exercise a high degree of caution.
DFAT’s latest update: “On 1 January 2017 a shooting attack in a central Istanbul nightclub has reportedly left 39 dead and 69 wounded. Police operations are ongoing and the attacker is reportedly still at large. Avoid the area, exercise heightened caution and remain vigilant to your personal safety and surroundings.
“We continue to advise you to reconsider your need to travel to Ankara and Istanbul and to exercise a high degree of caution in Turkey overall. Higher levels apply in some parts of Turkey.”
Written by : Peter Needham