The crash of the Turkish lira continues unabated

  • Forex News
The crash of the Turkish lira continues unabated

The downward slide of the Turkish lira continued Tuesday. Investors remain concerned about Erdogan's economic policies, which go against general doctrine.

Erdogan reiterated his position Monday night that raising interest rates would not help reduce inflation. "I reject policies that weaken our country and condemn our people to unemployment, hunger and poverty," he said. Last week, Turkey's central bank cut its key interest rate by 100 basis points to 15 percent.

It has already cut rates by 400 basis points since September, and that's despite consumer prices rising 19.89 percent year-over-year - the fastest pace since January 2019.

Erdogan has long been concerned about high interest rates and has repeatedly influenced the central bank's course.

The central bank is ignoring the "difficult inflation environment and putting Erdogan's demand for lower borrowing costs into practice," Societe Generale SA (PA: SOGN ) economists said in a note.

The monetary easing was simply "economically and fundamentally unjustified," the statement continued.

The Turkish lira fell to another record low against the US dollar on Tuesday. In the meantime, one dollar was worth 11.9994 lira. The euro rose against the Turkish lira at its peak to 13.5101 lira per 1 euro. Currently, the EUR/TRY is up 3.96 percent at 13.3304 lira.

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