The Turkish lira has collapsed to an all-time record low against the dollar, but the country’s leader has brushed aside concerns, telling Turks “we have our God.”
The lira hit fell more than 12 percent in value to reach more than six lira to each dollar on Friday morning. At around 5:00 ET, the currency had risen back to $5.911. As recently as April one dollar bought about four Turkish lira.
The latest bout of selling comes after a Turkish delegation returned from the United States with apparently no progress on the detention of a U.S. pastor. The evangelist, Andrew Brunson, is charged with supporting a group blamed for an attempted coup in 2016.
President Donald Trump said in July that the U.S. would place “large sanctions” on the country for the pastor’s detention.
Late Thursday, Turkish President Recep Erdogan said he will stand up to the pressure.
“There are various campaigns being carried out. Don’t heed them,” Erdogan said. “Don’t forget, if they have their dollars, we have our people, our God. We are working hard. Look at what we were 16 years ago and look at us now,” Erdogan told supporters.
The lira’s three-month implied volatility gauge hit its highest since late 2008. Implied volatility shows the market’s opinion of the currency’s potential moves. If the implied volatility is high, the market things the currency has potential for large price swings in either direction.