The Turkish lira returns to recovery after record lows
The Turkish lira continued to recover on Thursday after a historic plunge to record lows this week on the back of President Recep Tayyip Erdogan’s defense of interest rate cuts.
The lira was trading at 11.85 by 04:00 GMT, as it strengthened about 1.9% from about 12.0820 yesterday, Wednesday.
And recorded the lowest level against the dollar on Tuesday, at 13.45 pounds.
The Turkish currency recorded its lowest level ever against the dollar in 11 consecutive sessions before yesterday, as its losses since the beginning of the year reached 45% of its value.
The Turkish currency has incurred about half of those losses since the beginning of last week.
And last Monday, the Turkish president announced that the strict policy of interest rates would not reduce inflation, and vowed to succeed in what he called the “war of economic independence.”
Erdogan said – during a meeting of the Turkish government – that the increase in prices resulting from the rise in the exchange rate does not directly affect investment, production and employment, and stressed that he prefers a competitive exchange rate because it brings an increase in investment and employment.
Erdogan blamed the weakness of the Turkish lira on what he said were maneuvers over the exchange rate and interest rates.
President Erdoğan believes that the interest rate reaching large levels hinders production and investment, and pushes individuals and institutions to put their money in banks, and close companies and institutions, content with the interests they receive on their money.
And last week, the Turkish Central Bank cut the interest rate by 1%, to 15%, although inflation remained near 20%, which led to an increase in the currency’s decline and affected the reactions of the markets.