Turkish President Erdogan looks on as he walks next to Serbia's President Aleksandar Vucic during his recent visit to Serbia. Photo: Reuters/Marko Djurica

The Turkish lira plummeted Friday after reports surfaced that a trader accused of helping Iran evade sanctions invoked the name of Turkish President Recep Erdogan as part of a money-laundering scheme. Bloomberg reports, citing court documents, that US prosecutors say the scheme was supported by Turkey’s government.

Source: Bloomberg

The lira dropped to its weakest point since January, hovering around an all-time low for the currency.

From Bloomberg:

US prosecutors in New York have gathered taped conversations and other records that suggest the trader may have sought support from Erdogan. The Turkish president hasn’t been accused of wrongdoing, and it’s possible that the trader falsely invoked Erdogan’s name to influence others. The people charged in the case are captured in the recorded conversations, which were introduced in a filing in federal court in Manhattan.

The documents introduced in the sanctions and money- laundering case against the Turkish-Iranian gold trader, Reza Zarrab, could further complicate the relationship between the US and Turkey, a majority-Muslim country long considered a crucial ally in the region.

[…]

‘The Zarrab case is the one to watch in terms of US- Turkey relations,’ Tim Ash, a London-based strategist for BlueBay Asset Management LLP, said in an email to clients. ‘Zarrab is thought to have been close to the Erdogan family and, indeed, he was given Turkish citizenship, alongside Iranian. This is a real stress point.’

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