ISTANBUL, Aug 12 (Reuters) - Turkey’s lira weakened more than 1% on Monday, losing ground after firming to a four-month high last week as investors took a more cautious approach to emerging markets currencies.
The lira declined some 1.4% to stand at 5.5670 at 0921 GMT on Monday, a public holiday in Turkey due to the Eid al-Adha observance. It weakened as far as 5.57 earlier in the day.
The currency has clawed back the losses from a volatile selloff that began in March a week before nationwide local elections. It has recently outperformed other emerging market currencies, firming on Thursday to 5.4515, its strongest level since April.
Monday’s decline is likely related to a risk-off environment globally, which has also hit other emerging markets currencies, said William Jackson, chief emerging markets economist at Capital Economics.
“We’re so used to seeing the lira being the worst performing emerging market currency during a risk-off environment. So, the last week or two was something of a surprise, now it seems more like its back to normal,” he said.
The currency had risen despite Ankara abruptly sacking Turkey’s central bank governor last month and risking U.S. sanctions over buying Russian missiles.
It was also supported by expectations of looser monetary policy from the U.S. Federal Reserve and the European Central Bank.
Jackson said the recent dismissal of several other Turkish central bank officials may have alarmed investors, contributing to Monday’s decline.
Turkey’s central bank fired its chief economist, Hakan Kara, and some department managers, Reuters reported on Friday.
Also dismissed were the bank’s research and monetary policy general manager, Pinar Ozlu; markets general manager Orhan Kandar; and banking and financial institutions general manager Yavuz Yeter, a document seen by Reuters showed. (Reporting by Ali Kucukgocmen, editing by Ed Osmond)
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