Russian economic sanctions against Turkey weigh on Lyra

TRY was roaring yesterday with USD/TRY jumping last 2.92 versus 2.84, in the week earlier, with Russian government launching economic sanctions against Turkey for shooting down its warplane.

There is risk of financial freeze for the construction and retail businesses in Turkey, which do a $USD 4 bn business with Russia per year. Joint projects such as Turkey's Stream project and nuclear power plant construction were also frozen.

Use of Russian ports and airspace will also be restricted for Turkish vehicles. Economy minister announced these measures, implementation will however needs certain steps formally.

"It remains to be seen how permanent such sanctions will prove to be, neither economy can afford further setbacks at this time; but this is likely to be overlooked in the near-term; hence, it is difficult to see relief for the lira just yet", says Commerzbank.