The exchange rate of the Turkish lira fell to the lowest level in about two months against the dollar with renewed tension between Turkey and the United States.

The dollar was trading against about 5.85 pounds, to drop the Turkish currency about 0.6% from last Friday's close.

The Turkish currency has lost more than 9% of its value this year, mainly due to fears of deteriorating relations between Ankara and Washington due to differences over Turkey's purchase of the Russian S-400 missile defense system.

Last week, a US Senate committee endorsed a bill calling for punishing Ankara for its purchase of the missile system and its military incursion into Syria.

On Sunday, Turkish President Recep Tayyip Erdogan said that Turkey might consider closing the Incirlik Air Force Base in response to possible US sanctions.

"The Turkish currency is the weakest emerging market currency at the start of trading this week. The main reason is that these diplomatic tensions between the United States and Turkey may escalate, and Erdogan's statements are a clear threat that has worried investors," said Piotr Matisse, emerging market currency analyst at Rapo Bank.

Meanwhile, economist Abdul Muttalib Arba said that the rise of the dollar against the Turkish lira will reflect positively on Turkish exports abroad.

He added, in an interview with Al-Jazeera, that keeping the dollar price between 5.5 and six pounds helps to stimulate export-oriented production, noting that lowering interest rates by the central bank had a role in stimulating the local economy.

Abdul-Muttalib Arba also said that it is not possible to talk about the presence of tension within the Turkish market as a result of the decline of the local currency, and pointed in this regard to the decline in the levels of both inflation and unemployment.

Important indicators
Official indicators announced by the Central Bank and the Turkish Ministry of Finance indicate the following:

The Turkish current account registered a surplus of 549 million dollars last October.

- A record surplus in the Turkish budget amounted to 7.8 billion pounds (1.37 billion dollars) in November, compared to a deficit of 14.9 billion pounds in October.

- Unemployment in Turkey declined to 13.8% between August and October.

- The Turkish Central Bank cut interest rates from 14% to 12%, amid talk of continued improvement in inflation expectations.