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Monday, January 30, 2023

Turkish Lira Nose-Dives 15% in Value

On Tuesday, the Turkish lira plummeted 15% as President Tayyip Erdogan defended a divisive plan to lower interest rates to support the economy.

The currency fell to a new low of just over 13 lira to the dollar before rebounding marginally, marking the 11th consecutive day of declines.

Since September, Mr Erdogan has pushed Turkey’s central bank to undertake three rate cuts, the most recent being last week.

However, this has been accused for driving up inflation, which is currently around 20%.

Investors are losing faith in the Turkish lira, which has lost 45 percent of its value this year, making it the worst performing currency in the world.

Despite this, Mr Erdogan promised to continue to his policies on Monday, claiming that high interest rates do not reduce inflation, a position he has held for years.

After a cabinet meeting, he remarked, “I oppose measures that would contract our country, weaken it, and sentence our people to unemployment, hunger, and poverty.”

“We observe the game being played by those in charge of the currency, interest rates, and price rises… and we demonstrate our willingness to carry out our own game plan,” he continued.

Lower interest rates, according to the president and his friends, will increase Turkish exports, investment, and job creation. Many economists, though, believe the rate cuts are rash.

Semih Tumen, the president’s former deputy governor who was fired last month during a leadership shake-up, urged for a return to measures that safeguard the lira’s value.

“This illogical experiment with no prospect of success must be abandoned immediately,” he said on Twitter, “and we must return to quality policies that defend the Turkish lira’s value and the prosperity of the Turkish people.”

Because of the situation, opinion surveys show that Mr Erdogan’s AK Party is losing popularity, and opposition lawmakers have called for early elections.

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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