The Turkish lira slid to a record low Wednesday after the White House announced it would sanction the country over the detention of a U.S. pastor, dealing a fresh blow to what has been one of this year’s worst-performing currencies.
The lira USDTRY, +0.0000% recently fell 1.7% against the U.S. dollar after being essentially flat earlier in the day, bringing its loss for the year to 24%. One dollar recently bought 4.996 lira.
The U.S. said it will place sanctions on the Turkish ministers of Justice and Interior over the holding of Andrew Brunson, who Turkish prosecutors accused of aiding a failed military coup against President Recep Tayyip Erdogan, a charge the pastor denies. U.S. officials say the case is politically motivated. If convicted, Brunson faces up to 35 years in prison. The sanctions are likely to further strain relations between the two countries and come as Turkey combats a potential currency crisis driven by questions over the independence of its central bank.
The lira has plunged since April, when a resurgent U.S. dollar began to pressure a broad swath of emerging-market currencies. Turkey was seen as particularly vulnerable to the stronger U.S. currency because of Turkey’s large dollar-denominated debt load, which becomes more expensive to repay as the lira slides.
An expanded version of this report appears on WSJ.com.
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