Turkish lira drops 1% as inflation fears return

The Turkish lira fell more than 1 percent against the dollar on Tuesday, giving up early last week’s gains, as investors evaluated data showing a new rise in inflation to a 24-year high.

The lira was trading at 17.03 against the US currency by 1232 GMT, down from the previous closing level of 16.8360. The Turkish currency rose to 16.03 on Monday last week after Turkey moved to strengthen the currency by restricting lending in lira to companies rich in hard currency.

It was the latest in a series of moves to strengthen the lira after it slumped 44 percent last year following a series of interest rate cuts sought by President Recep Tayyip Erdogan. The currency has fallen 22 percent so far this year.

Data on Monday showed annual inflation jumped to 78.62 percent in June, driven by the war in Ukraine, rising commodity prices and a weak lira.