: The lira, which had its eighth week of declines, is the second-worst performer among 24 emerging-market peers this year after the Brazilian real with a depreciation of 23 per cent, according to Business Week. Escalating tension between the government and Turkey Kurdish population in the run up to the second round of elections in six months has dragged the lira to oversold levels this month, indicating to some analysts that the selloff may be exaggerated. The currency fell 1 per cent to 3.0517 against the dollar as of 5:44 p.m. in Istanbul after sinking to a record low 3.0615 on 10 September, taking the loss this week to 1.5 per cent. The prospect of a Federal Reserve rate increase has also damped appetite for riskier assets, with foreign investors pulling a record $6.88 billion from Turkish stocks and bonds so far this year. The currency will probably not hold above the 3-per-dollar threshold and may see a short-term correction from oversold levels, he said. Concerns about Turkish politics are unlikely to diminish ahead of early general elections and will limit scope for the lira to trim its losses, Piotr Matys, a London-based foreign- exchange strategist at Rabobank, who expects the Fed to keep rates unchanged next week, said by e-mail.
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