© Reuters.  Turkish lira off the lows, remains under pressure© Reuters. Turkish lira off the lows, remains under pressure

Investing.com – The Turkish lira remained sharply lower against the U.S. dollar on Monday but was off the weakest levels of the session as a brewing diplomatic crisis between the U.S. and Turkey escalated.

USD/TRY was up 2.46% at 3.7042 by 05:22 AM ET (09:22 GMT) after jumping as high as 3.7487 overnight, the most since mid-March.

Trade volumes remained light on Monday, with markets in Japan shut for a holiday. U.S. stocks markets were due to trade, though the bond market was closed for the Columbus Day holiday.

The lira tumbled overnight after the U.S. and Turkey mutually suspended visa services between the two countries on Sunday.

The move effectively blocks Turks from travel to the U.S., and vice versa, indefinitely.

The suspension of visa services comes after last week’s arrest of a U.S. embassy employee in Istanbul for alleged involvement in the July 2016 coup attempt against President Recep Tayyip Erdogan.

Washington has dismissed the allegations as baseless.

The lira was also lower against the euro, with EUR/TRY last at 4.3502, up 2.59% after rising to a record high of 4.4015 overnight.

Meanwhile, the main Turkish stock market index, the BIST 100 was down 3.63%.

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