Turkey's currency surges more than 3% on hopes a detained American pastor will be released
- The Turkish lira was up more than 3% Monday.
- Turkey may release an American whose imprisonment has caused conflict with the US.
- Watch the lira trade in real time here.
Turkey's currency rallied Monday amid reports the country could release an American whose controversial imprisonment has been at the center of an ongoing feud between Ankara and Washington.
The lira was up more than 3.5% to 6.1279 against the dollar after the Wall Street Journal reported a Turkish court could release 50-year-old Andrew Brunson at an October hearing - if the US turns down pressure to do so. The evangelical pastor was arrested in 2016 for allegedly aiding terrorist groups, charges he denies.
The case has fueled both diplomatic and economic rifts between the US and Turkey. In August, the Trump administration doubled existing tariff rates on Turkish aluminum and steel after the NATO allies failed to make progress on negotiations for Brunson's release.
Earlier that month, it had imposed sanctions on Turkey's minister of justice and minister of interior, whom the White House said played "leading roles" in the arrest and detention of Brunson.
Conflicts between Turkey's central bank and government have also put pressure on the lira, one of the worst-performing currencies this year.
Turkey's central bank raised its key rate by 625 basis points to 24% in early September, despite backlash from President Recep Tayyip Erdogan. The president backs unorthodox policies like cutting rates amid accelerating inflation and has increasingly tried to wield influence over monetary policy since his reelection this year.
"October will be a key month on the geopolitical front, and potentially positive headlines could trigger larger swings in USDTRY and TRY assets in general," Citi analysts led by Dirk Willer wrote in a note.
