Turkish lira (TRY) drops to a new record low | City A.M.

Turkey’s financial markets were under intense pressure on Thursday following the US decision to freeze the assets of two of the country’s government ministers.

The Turkish lira dropped to its weakest ever level against the US dollar, hitting $5.09 before recovering to around $5.05, according to Bloomberg data. This was a drop of around 1.1 per cent on the day and takes the slide so far this year to 25 per cent.

The sell-off extended into the country’s bond market with yields on 10-year Turkish debt hitting a record high of 19.5 per cent on Thursday morning, a jump of almost 0.9 percentage points on the day according to Bloomberg. Yields move inversely to the price.

The stock market also tumbled with the main index down 2.4 per cent on the day.

Read more: Turkish lira gains ground as central bank tries to prop up confidence

The US sanctions came in response to Turkey’s ongoing detention of an American pastor, Andrew Brunson, who is being held on charges of terrorism and espionage.

The Turkish central bank has raised the main policy rate by five percentage points since April in an effort to cap the slide in the currency and the acceleration in inflation. Consumer price growth reached a 14-year high of 15.4 per cent in June.

Currency weakness makes it more expensive for Turkey’s companies to service their large stock of US dollar-denominated debt.

Read more: Turkish lira rallies following Erdogan’s referendum victory