On Thursday, the Turkish lira (TRY) fell to a record low against the United States dollar (USD), reaching 7.49 to the dollar, which is lower than its previous record low of 7.236 that was seen during the country’s August 2018 currency crisis.
The weakening currency follows an increasing amount of pressure for the emerging market currency, as rising inflation, slow economic growth, and growing unemployment have been weighing heavily on the country, in addition to extra pressures from the COVID-19 global pandemic.
The drop in the lira came as investors worried about diminished currency reserves and the need for foreign financing, and according to market consensus, the currency is expected to continue to weaken, with some analysts forecasting a full-year recession for Turkey.
Following the drop in the currency, across Thursday and today, brokers have been sending emails and publishing updates for their clients regarding the situation and how they are responding.
Japanese trading providers respond to Lira situation
This Friday, at least four new trading providers have announced new safety measures or put out warnings for their clients – Excite One Co., Ltd, Forex Online, FOREX.com, and SBI FX Trade.
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Specifically, Excite One has said that it has settled the following currency pairs in order to avoid “unforeseen circumstances in transactions due to liquidity deterioration and price not being delivered, and unexpected risks” – USD/TRY, EUR/TRY and TRY/JPY.
Forex Online, FOREX.com, and SBI FX Trade have all posted warnings on its websites against the lira, warning of its unpredictability and the risks associated with this currency.
“Due to the increasing tension in the market environment around Turkey, there is a possibility that swap points for Turkish lira-related issues will be significantly paid in both sell and buy positions,” FOREX.com said on its website.
“Customers are kindly requested to pay close attention to the possibility of sudden fluctuations in swap points and market prices, and to manage their transactions and accounts with sufficient margin.”
Think Markets and OANDA respond to the situation
As Finance Magnates reported yesterday, FCA-regulated Think Markets said it has transferred trades on EUR/TRY and USD/TRY currency pairs to the close only mode until further notice.
OANDA Japan introduced fresh restriction measures for Turkish lira related transactions. Namely, it has stopped accepting new orders for the Turkish currency pairs as of today, with the timing of reopening still undecided.