Turkish currency sinks to record 3 lira to euro

The Turkish currency sank on Tuesday to a record low against the euro, hitting the psychologically key level of three lira to the euro as the country remained embroiled in a deep political crisis. The euro briefly touched 3.0013 lira in early afternoon trading, while the Turkish currency was also trading at 2.1938 to the dollar. The Istanbul stock market also lost ground, sliding 1.32 percent to 67,221.75 points. The stress on financial markets also came amid continuing investor concern about Turkey's external financial position. "Turkey is currently facing a dangerous combination of large external imbalances, higher global yields and escalated domestic political tensions," Finansbank said in a commentary. Official figures released on Tuesday showed some relief however, with the current account deficit for November coming in below market expectations. The current account deficit for the month stood at $3.9 billion (2.8 billion euros), down from $4.1 billion recorded in November 2012, resulting in a contraction of the 12-month rolling deficit for the first time since March, Finansbank said. "The external deficit that Turkey can sustain is much lower now. Therefore, we foresee Turkey’s external deficits to continue to shrink in the forthcoming period, on account of the weakness of the Turkish lira and a likely weakening of the domestic demand as well as the recovery of the global economy," it said.