Turkey’s lira dropped on reports that U.S. President Joe Biden plans to recognize the Armenian genocide in a move that would worsen fraught relations between the NATO members, Ahval News reports.

The lira fell by as much as 2.2 percent against the dollar on Thursday. It was trading down 1.7 percent at 8.31 per dollar at 10:43 a.m. local time in Istanbul.

Biden is expected to formally recognize the mass killings of ethnic by the Ottoman Empire early last century as an act of genocide, the New York Times and reported on Wednesday, citing U.S. officials.

Ties between the United States and Turkey have worsened over the past three years after Turkey purchased S-400 missile systems from Russia and launched a military operation against Kurds fighting alongside U.S. troops against Islamic State (ISIS).

The lira also declined after the United States officially notified Turkey of its exclusion from a programme to develop and acquire the F-35 stealth fighter jet. The decision, first announced last year but not formally delivered, was made in response to Turkey’s acquisition and testing of the S-400.

The Turkish currency has slumped by 28 percent since the start of last year as investors fretted over unorthodox economic policies followed by the government and central bank. The lira also fell on Thursday after President Recep Tayyip Erdoğan said on Wednesday that the central bank could sell foreign exchange reserves to support the currency. That would threaten a repeat of mass sales of the reserves last year that left the bank’s war chest severely depleted.   


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