Jakarta, CNN Indonesia —
Turkish Lira fell more than 15 percent on Tuesday (23/11) yesterday. This happened after President Tayyip Erdogan defend the decline interest rate and promised to win the ‘economic war of independence’.
Quotes Reuters, Wednesday (24/11), the lira fell to the level of 13.45 per US dollar. This figure is the lowest point in the 11th consecutive trading session.
The lira has fallen 42 percent so far this year. Meanwhile, the lira has fallen more than 22 percent since the start of last week.
Erdoan pressured the central bank to keep easing policies to boost exports and investment. This was done when inflation soared by almost 20 percent and currency depreciation accelerated.
Some economists consider lowering interest rates is a ‘reckless’ policy. Turks say the lira’s decline has turned household budgets upside down and plans for the future.
Turkey’s central bank governor Sahap Kavcioglu said selling the lira was unrealistic and unrelated to the country’s economic fundamentals. So far, there has been no intervention from the central bank to intervene in the decline in the lira.
Meanwhile, Turkey’s former deputy central bank governor Semih Tumen said there needed to be policies that protected the value of the lira.
“This irrational experiment that has no chance of success must be abandoned immediately and must return to policies that protect the value of the Turkish lira and the prosperity of the Turkish people,” Tumen said on Twitter.
For information, the decline in the Lira in yesterday’s trading was the largest since the currency crisis in 2018.
Turkey’s central bank is noted to have cut interest rates by 400 points since September 2021. This is in contrast to other central banks which have begun to prepare for tightening monetary policy due to rising inflation.
The lira became the worst performing debt currency globally this year because of the policies adopted by Erdogan.
“Prices are rising too fast. I don’t want to buy certain products because they are too expensive,” said Kaan Acar, a hotel executive in the southern Turkish resort of Kalkan.
Investors also appear to have fled when Erdogan abruptly fired central bank chief Naci Agbal and replaced him with Kavcioglu, who is also a critic of high interest rates.
Kavcioglu decided to cut interest rates by 100 basis points to 15 percent last week. The central bank also hinted at another cut in December 2021.
As the lira fell, Turkey’s main stock index rose 1.7 percent to a new record high on unexpectedly cheap valuations.
(aud / bir)
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