Lira steady as Turkey rebuffs Bolton comments

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The under-pressure lira held steady against the US dollar on Wednesday, as Turkey called comments from US national security adviser "proof that the Trump administration is targeting a NATO ally as part of an economic war."

US national security adviser John Bolton had told Reuters during a visit to Israel that Ankara "made a big mistake in not releasing Pastor (Andrew) Brunson".

In a written response released as a statement, Turkish President Recep Tayyip Erdogan`s spokesman Ibrahim Kalin said "Turkey has no intention of starting an economic war with any party. It cannot, however, be expected to keep silent in the face of attacks against its economy and judiciary."

Kalin's statement went on to underline that "the US administration`s most recent policies are at odds with the fundamental principles and values of the NATO alliance."

The lira has lost 37 percent of its value this year in a crisis triggered by concerns over President Erdogan's influence on monetary policy and exacerbated by the dispute over Brunson with Washington.

Read more: Who is Andrew Brunson?

The Brunson case was likely to continue to add to the lira's woes, said Per Hammarlund, a chief emerging markets strategist at SEB.

"Ultimately, they will release Brunson but it will take a while and as long as there is a risk to US dollar flows to Turkish banks or to Turkey in general, then the lira will be under pressure," Hammarlund said.

"I wouldn't be surprised if we see another bout of volatility in the lira and a sharp weakening again."

Trade was thinner than usual after Turkish markets closed at midday on Monday for a week's holiday to mark the Muslim Eid al-Adha festival.

Turkish sovereign dollar bonds rose across the curve, with some issues gaining around 1.5 cents.

Brunson, who has lived in Turkey for two decades, has been detained for 21 months on terrorism charges, which he denies, and is now under house arrest.

(With inputs from Reuters)