Largest fall… Turkish lira hits lowest level in history against dollar

Unlike other major economies, Turkey is not responding to the price hike by raising its key interest rates, with the Turkish Central Bank’s main interest rate actually falling from 14 to 8.5 percent since last August and so far.

Losses

Reuters International News Agency reported that with less than a month left before Turkey’s presidential and parliamentary elections, the national currency had fallen to its lowest level in history, with the exchange rate of the dollar at nearly 19.5 Turkish lira, the biggest depreciation of the Turkish currency since it was first introduced in January 2005, and the new Turkish lira was not very valuable.

The Turkish national currency has lost value significantly since the end of 2021, so the government led by President Recep Tayyip Erdogan in Ankara decided to take support measures again, but these measures failed to manage the economic crisis, said financial analyst Mike Harris of the consulting firm Strategy Macro.

It added that although Turkey’s inflation rate has steadily declined over the past five months, it remained at 50.51% year-on-year in March, and unlike other major economies such as the US, Turkey is not addressing the price rise by raising key interest rates. The main interest rate of the Turkish Central Bank has actually dropped from 14 to 8.5% since August, which came under pressure from Turkish President Recep Tayyip Erdogan. Contrary to prevailing economic theories, high interest rates are believed to encourage inflation.

Erdogan’s promising rival in the presidential election on May 14 this year, Kemal Kılıçdaroğlu, promised that if he won the election, he would pursue a currency policy based on internationally accepted creed and restore the independence of the Turkish Central Bank, where Turkey’s economic crises are reducing Erdogan’s chances of re-election.