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Monday, January 30, 2023

Turkish Lira Slumps to New Record Low

The Turkish currency has hit a new low amid speculation that the central bank may lower interest rates again later this week.

It fell over 7% to little under 15 to the dollar at one point, but it rebounded slightly as the bank intervened in the market to support it.

The currency is now worth around half of what it was at the start of the year.

Despite rising inflation, President Recep Tayyip Erdogan has pressed the central bank to maintain decreasing rates.

According to economists polled by Reuters, the Turkish central bank will cut its main interest rate from 15% to 14% on Thursday. It would be the company’s fourth layoff in as many months.

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.

The country’s inflation rate touched 21.7 percent last month.

Taxi drivers, food vendors, and hotel clients in Istanbul, according to the BBC’s Victoria Craig, have all voiced astonishment and fury as the value of their money has decreased day by day.

Central banks often boost interest rates to battle increasing prices, but Mr Erdogan has dubbed such weapons “the mother and father of all evil.”

Although the bank has sought to support the lira’s value by purchasing it with its dollar reserves, analysts believe it lacks the capacity to reverse the currency’s decline.

In a letter, Morgan Stanley wrote, “We doubt that either intervention or a balanced current account would be helpful in stabilizing the currency.”

It went on to say that the central bank’s relatively low reserves meant such measures may backfire.

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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