Lyra continued to fall
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S&P Global Ratings has downgraded the outlook on Turkey’s credit ratings to negative.
The Turkish lira set a new all-time low, falling on Monday morning, December 13, to 14.99 per dollar. At the same time, the lira fell immediately by 7%, according to German wave.
During the day, the lira recovered a little and consolidated at 14.33 against the dollar, but the value of the currency continues to fluctuate.
It is noted that in the last month alone, the lira has lost almost 30% of its value and more than 43% since the beginning of the year. Annual inflation in November amounted to 21.3%, reducing the purchasing power of the Turks.
As the newspaper writes, the fall in the lira was caused by the expectation of another decline this week by 1 pp. up to 14% of the discount rate by the central bank, which is regarded by market participants as a continuation of the interference of the country’s President Recep Erdogan in the policy of the regulator.
Erdogan himself, who once appointed his son-in-law as finance minister, believes lower interest rates are key to economic growth. He also argues, contrary to popular economic belief, that high interest rates fuel inflation. Most central banks cut interest rates to try to stimulate growth if inflation is low, and raise them if they deem it necessary to contain inflation.
The international rating agency S&P Global Ratings reacted to the refusal of the Central Bank to raise the interest rate and lowered the outlook on Turkey’s credit ratings to “negative”. Long-term ratings remained at the same level: B + for liabilities in foreign currency and BB- in national.
Recall, at the end of November, Erdogan’s statement on his intention to win his “economic war for independence” collapsed Turkish lira… It was also reported that Turkish Lira exchange rate fell by half year to date.
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