Site icon McKoysNews

Turkish Lira Slumps Further to a New Record Low


The Turkish lira has fallen to a new record low amid fears that the central bank will make a further cut in interest rates later this week.

At one point, it was down nearly 7% at just under 15 to the dollar, but it recovered slightly after the bank intervened in the market to prop it up.

The currency is now worth about half its value at the beginning of the year.

President Recep Tayyip Erdogan has pushed the central bank to keep cutting rates despite surging inflation.

Economists surveyed by Reuters expect the Turkish central bank to reduce its main interest rate from 15% to 14% on Thursday. It would be the fourth such cut in as many months.

The president and his allies argue that lower interest rates will boost Turkish exports, investment, and jobs. But many economists say the rate cuts are reckless.

Last month, the country’s inflation rate hit 21.7%.

Normally, central banks raise rates to combat rising prices, but Mr. Erdogan has called such tools “the mother and father of all evil”.

Although the bank has attempted to bolster the value of the lira by using its dollar reserves to buy the currency, analysts say it does not have enough firepower to stop the slide.

It added that the central bank’s relatively thin reserves meant interventions could turn out to be counter-productive.

Exit mobile version