The Turkish lira’s (TRY’s) depreciation gained pace on April 10, taking the currency to as low as 4.1390 to the dollar, a new all-time trough. By around 17:00 Istanbul time, its losses had been trimmed to 4.1103. The currency had begun the day on 4.0772.

Investors remained anxious over Turkish President Recep Tayyip Erdogan’s defiant ‘Erdonomics’ which, despite Turkey’s sticky double-digit inflation, plunging currency and huge current account deficit recommends monetary loosening in the face of orthodox market calls for tightening. The fear is that the independence of the central bank in Turkey has essentially been lost to the politicians. Analysts noted that there were no signs of moves from the regulator or emergency measures from the government to rebalance the economy and ease traders’ concerns.

However, it is not just country-specific worries that are weighing on the TRY. The tumbling Russian rouble amid Washington’s spat with Moscow over fresh sanctions, geopolitical risks related to the fraught situation in the Middle East that has developed over the latest alleged chemical attack in Syria and Turkey’s vulnerability to US Fed rate hikes also ate away at the value of the currency.

The yield on Turkey’s 10-year benchmark domestic bonds moved up to 13.38% on April 10 versus 13.12% at closing prices on April 9.

In contrast to Turkey’s TRY difficulties, emerging market currencies gained ground against the USD on April 10 after China promised to reduce import tariffs despite trade war salvos from US President Donald Trump. The dollar index, showing the USD’s performance against a basket of world currencies, was down 0.23% d/d to 89.629.

The Istanbul stock exchange’s benchmark BIST-100 index was down 2.43% to 110,401 at the close. Recent rumours that local conglomerate Dogus Holding was following Yildiz Holding in debt restructuring talks with local lenders raised pressure on banking assets.

The Turkish central bank will hold its next monetary policy committee meeting on April 25. April 11 should bring the latest current account deficit data.