US dollar drops below 3.40 Turkish liras

ANKARA (AA) - The U.S. dollar fell below the 3.40 mark against the Turkish lira on Wednesday evening.

The dollar went down to 3.3962 by 6.10 p.m. local time (1510GMT).

The drop continued after the Turkish Central Bank issued a statement on Tuesday stating that the inflation rate forecast would be held at 7.5 percent.

The dollar fell below the 3.50 threshold on Tuesday against the lira, its first time at that level since Dec. 1.

Speaking at a press conference Tuesday on the bank's 2017 monetary and exchange rate policy, Central Bank Governor Murat Cetinkaya said that Turkey’s economic activity has been recovering in the last quarter of 2016, while fluctuations in the lira will not have a "durable" impact on the economy.

Cetinkaya said the Central Bank would hold its year-end inflation forecast at 7.5 percent, citing a favorable outlook for food prices and moderate domestic demand despite foreign exchange volatility as reasons.

"The bank will continue to support financial stability while aiming to keep inflation close to the target," he added.

About support for the lira, Cetinkaya said: "We will continue to support the local currency as the medium of exchange in economic activities."

On Sunday, President Recep Tayyip Erdogan said Turkey had taken steps to carry out its foreign trade using national currencies.

"If we buy something from them [foreign countries], we will do that in their currency; if they buy something from us, they will do it in our currency," Erdogan said, adding Turkey will "play its own game" in the economic arena against "all the games" played against it.

Since last week, the president has been calling on Turkish citizens to convert their foreign exchange savings into Turkish lira and gold to help boost the lira’s value.