The Turkish lira fell to session lows against the dollar Monday after Andrey Karlov, the Russian ambassador to Turkey, was shot and killed in a gun attack in Ankara. The gunman — who was part of the Ankara police department's special operations unit — shouted about Aleppo, the Syrian city where rebels were defeated this month by Russian-backed government forces, as he carried out the attack at an art exhibit.
The lira was down about 0.6 percent, at 3.526 lira per dollar, at press time.
The Turkish currency has lost nearly 20 percent against the dollar this year, a large enough drop to declare a currency crisis, said Steve Hanke, director of the Troubled Currencies Project at the Cato Institute. Political turmoil and acts of terrorism that have plagued the country in recent months have put Turkey's $720 billion economy at a tipping point.
Turkey's economy is shrinking for the first time since 2009, by 1.8 percent in the third quarter. The situation has led to a drop in foreign investment.
Earlier this month, President Tayyip Erdoğan appealed to Turkish citizens to convert savings held in foreign currencies into gold and Turkish lira. Gold is on track for one of its worst quarters in two decades.
According to economists, the fear is if uncertainty persists, it could induce capital flight out of Turkey, and that could put the country on shaky ground.
"The key concern for foreign investors relates to the erosion of the rule of law," according to Sinan Ulgen, managing partner at Istanbul Economics and a visiting scholar at the Carnegie Endowment for International Peace. "Turkey is going through exceptionally difficult domestic conditions following the botched military coup of last July."
