Currency crisis in Turkey: the Central Bank defends its decisions amid the collapse of Liras

U.S.A.Currency crisis in Turkey: the Central Bank defends its...

Turkish President Tayyip Erdogan and Central Bank Governor Sahap Kavioglu (Photo: Reuters)

NS Turkish Lira fell to a record low on Tuesday and Central Bank of Turkey After the president defended his performance Risp Tayip Erdogan stood firm in support of interest rate cuts, warned that his country was in one “War for Economic Freedom”.

The Turkish currency was trading higher by over 13 lira against the dollar, down 15%.Before recovering slightly from the historic fall.

Turkey faces worst currency crisis since August 2018, when the value of the lira hit a record low during a dispute with the then US President Donald Trump.

Turkey‘s central bank on Thursday slashed its policy rate from 16% to 15% under pressure from Erdogan. Despite rising inflation and rapidly depreciating currency.

“Traders have finally gone back to the limit and have completely lost patience with the policies being taken by the central bank”he told the agency AFP Craig Erlam, senior market analyst at OANDA.

A bunch of Turkish lira at the Ankara Exchange House (Photo: Reuters)
A bunch of Turkish lira at the Ankara Exchange House (Photo: Reuters)

“There’s a reason central banks are independent and that’s what happens when you cross the divide, A perfect storm of policy-driven monetary policy, a Complete disregard for inflation and other central banks taking a more sensible approach“, said.

erdoganMILF a franc Opponent of high interest rates, has always built up its popularity on the basis of Reputation for strong economic growth and improving income for families across the country.

It is known for its The unconventional belief that high interest rates cause inflation rather than help control it.

Turkish leader was defiant and defended the current policies in a speech to the nation after a cabinet meeting on Monday.

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“We see the game being played by those on currency, interest and price appreciation… And we show a willingness to continue with our own game plan.“, said. “We will be victorious in this war of economic freedom with the help of Allah and our people.”

40% damage

Passersby exchange money at an exchange office in Istanbul this Tuesday (Photo: Reuters / Dilara Senkaya)
Passersby exchange money at an exchange office in Istanbul this Tuesday (Photo: Reuters / Dilara Senkaya)

Lira has lost over 40% of its value against the dollar since the beginning of the year and lThe annual inflation rate has reached around 20%, quadruple the government‘s target.

NS Turkey‘s minimum wage in January was about $380 And, after Tuesday’s volatility, Now it costs $224 Based on a net monthly salary of 2,825.90 litres.

The central bank has reduced its policy rate by 4 percentage points to 15% since August.

After the Lira crash on Tuesday, Erdogan met with the governor of the central bank, sahup kaviogluAccording to local media, which did not give further details.

Tuesday later, The bank defended its position, saying that “Exchange rates are determined by supply and demand conditions according to free market dynamics“It’s a statement.

“Under certain conditions, the central bank can only intervene in extreme volatility without pointing to a sustainable direction.”

Analysts believe that there may be a storm of economic crisis in the country Put pressure on Erdogan as he prepares for the 2023 elections Amid signs of strength within the opposition, which has so far failed to seriously challenge him.

(with information from AFP)

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The Turkish lira fell 13 percent and hit a new all-time low after Erdogan defended lower rates

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