Mubasher: The Turkish lira (TRY) declined by more than 1% against the US dollar on Monday, according to Reuters.

By 12:37 pm GMT, the lira dropped against the greenback as the USD/TRY pair climbing by 0.88% to TRY 5.8099, weakening from a close of TRY 5.7540 on Friday.

The currency slipped briefly to TRY 6.47 in what was dubbed as a “flash crash” as Japanese investors scaled back riskier assets over trade war jitters.

President Donald Trump on Friday announced an additional tariff on around $550 billion in Chinese goods, just hours after Beijing declared retaliatory levies on $75 billion worth of products imported from the US.

The intensifying trade conflict between the US and China “means that [emerging market foreign exchange market] will continue to weaken for the foreseeable future,” a note by Société Générale was quoted by Reuters.

Friday’s developments cast a gloom over the world economy outlook, prompting investors to seek safety in assets like sovereign bonds and gold, and weighing on emerging markets (EMs) like Turkey.

“In the absence of a thawing in trade frictions it remains a market to be structurally short EM and buy dollars on any dip,” Société Générale currency analysts said.

The brief slump in thin overnight trading between Japanese yen (JPY) and lira was the second “flash crash” since 3 January when the Turkish currency hit a similar level owing to global market sell-off and risk avoidance.