The Turkish lira hit the lowest price on the 23rd, dropping 15% against the dollar. President Erdogan’s defense of the recent sharp rate cuts and his determination to succeed in the “war of economic independence” is the second largest drop in the day.
The lyre ends the day before at $ 1 = 11.4000 liras. On the 23rd, it was temporarily lowered to 13.45 lira. After that, although the rate of decline was reduced, it reached a record low for 11 consecutive days. The rate of decline from the beginning of the year reached 45%.
Lira hit a record low against the euro. Turkey’s 10-year bond yield has surpassed 21% for the first time since early 2019.
President Erdogan said at a press conference on the 22nd that tightening monetary policy would not reduce inflation and that he would succeed in his “war of economic independence.”
“We reject policies that shrink and weaken the country and drive people to unemployment, hunger and poverty,” he said.
The central bank of Turkey has been cutting interest rates by a total of 400 basis points (bp) since September. Many analysts point out that it is a risky policy mistake.
Former Deputy Governor of the Central Bank of Turkey, Tumen, who was dismissed in October by President Erdogan, posted on Twitter that “this unreasonable experiment is unlikely to succeed,” calling for an immediate return to the policy of preserving the currency lira market. rice field.
On the 18th of this month, the Bank of Turkey lowered the weekly repo rate of the main policy interest rate from 16.00% to 15.00% by 1.00 percentage points. Despite inflation reaching nearly 20%, the central bank has suggested further easing.
Societe Generale said the central bank of Turkey will move to an “urgent” rate hike next month, and the policy rate is expected to rise to around 19% by the end of the first quarter of next year. Goldman Sachs said it will be raised to 20% by the second quarter of next year.
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