2023-06-22 12:34:00
The Turkish lira fell 2.5 percent once morest the dollar on Thursday, following the central bank raised the main interest rate by 650 basis points to 15 percent, in a move that represented a reversal of President Recep Tayyip Erdogan’s policy of cutting interest rates, but it was less than expected.
The lira recorded a record low of 24.25 once morest the dollar, in a rapid decline that took only regarding half an hour following the interest rate decision was announced. This increased the lira’s losses once morest the US currency this year to nearly 23 percent, according to Archyde.com.
The pace of decline in the Turkish lira accelerated following the re-election of President Recep Tayyip Erdogan on May 28.
In the 18 months leading up to the election, the central bank used nearly $200 billion in reserves to try to boost the currency, yet it remained one of the worst performing emerging markets.
Erdogan recently appointed two former Wall Street bankers, Mehmet Simsek and Hafiz Gay Erkan, to run the country’s finances, signaling a possible shift to reduce heavy state intervention in favor of letting the market determine the fair value of the currency, according to Bloomberg. earlier.
Foreign investors bought a total of $287 million in Turkish bonds and stocks, the largest influx since December, Turkish Central Bank data showed above.
Turkey’s annual inflation rate fell below 40 percent in May for the first time in 16 months, following touching 85 percent last year.
And “Bloomberg” stated that the Turkish “economic miracle” that existed in the two thousand years during the first decade of Erdogan’s rule has ended, as foreign investors left for fear of instability and the seizure of institutions that were previously run by neutral technocrats.
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