February 7, 2023

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The Turkish lira is falling to an all-time low

The Turkish lira is falling to an all-time low

After Turkish President Recep Tayyip Erdogan fired three policymakers at the central bank, investors were worried about the possibility of further easing of inflation, despite a rise in inflation, and the Turkish lira fell to a new record against the dollar on Friday.
The lira lost 0.4% of its value against the greenback to an all-time low of 9.2250. 9.2100 was recorded during trading. The Turkish currency has fallen 19% so far this year.
“These frequent changes by members of the central bank’s decision-making team underscore the message that Turkey’s central bank is not independent and is under tremendous political pressure,” said Silva Demiralp, director of the KoƧ University Economic Research Forum and a former economist with the U.S. Confederation. Balance.
“Unreliability is making markets tense not only because they are likely to deviate from the inflation target, but also because raising bank rates will make it harder to increase at this point,” she added.
Two of the three fired central bank officials on Thursday opposed cutting the interest rate by 18 basis points to 18%, and their dismissal was seen as a prelude to further easing monetary policy as soon as next week.
Analysts have seen the move as further evidence of Erdogan’s political interference, which he has previously described as the enemy of interest rates and often emphasizes monetary incentives.

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