* Lira touches trough of 2.2118 against dollar
* Stream of corruption probe accusations unnerves market
* Strong U.S. economic data also pressures lira
By Dasha Afanasieva
ISTANBUL, Jan 16 Turkey's lira weakened to a
record low beyond 2.2 against the dollar on Thursday, hit by the
twin impacts of a corruption scandal dogging the government and
robust U.S. data.
Dawn raids and arrests in mid-December led to the
resignation of three ministers and removal of hundreds of police
officers, shaking the political establishment.
Fresh allegations emerging daily in local media and social
networks were adding to political uncertainty and a feeling of
unease on financial markets.
"We are seeing the most serious challenge for the government
through their period of rule, over a decade now," Gokce Celik,
analyst at Finansbank said.
"As the accusations draw closer to the inner circle (of the
ruling AK Party) they arouse more concerns regarding political
stability especially in the run-up to local elections in just
over two months."
The lira was also affected after a Federal Reserve Bank of
New York gauge of manufacturing in the state jumped to its
highest level in 20 months in January, boosting the dollar.
The data suggested that the U.S. economic recovery is not
losing steam, supporting the case for a faster cut in U.S. bond
Turkey is particularly vulnerable to reductions in U.S.
stimulus because it depends on cheap capital inflows to finance
its gaping current account deficit, running at 7 percent of
gross domestic product.
The lira hit a new low of 2.2118 against the
dollar in early trade before recovering slightly to 2.2085 at
0804 GMT, from 2.1880 late on Wednesday.
Turkey's two-year benchmark bond yield rose 18 basis points
in initial trade to 10.13 percent from 9.95 percent at
The yield on the 10-year benchmark bond rose
to 10.32 percent from 10.18 percent late on Wednesday.
The main Istanbul index was down 1.41 percent at
67,176.81 points and lagged the main global emerging market
index which fell 0.11 percent.
(Editing by John Stonestreet)