EconomyTurkey

The lira of Turkey set a new record low versus the US dollar

On Thursday, the lira of Turkey decreased to a new record versus the US dollar, while the investors worried about the economic policies of the government and the reserves of dollar showed a remarkable decrease.

The lira was changing at 7.28 versus the greenback around 1030 GMT, conducting to a loss of more than 3 percent since the start of the day, which is the lowest since May when it reached a then-record low of 7.24.

The coin also showed its lowest level versus the euro, changing close to 8.60 against the European currency at 1030 GMT. This new decrease comes while the markets are worry about a decrease in the foreign currency reserves at the central bank of Turkey, which looks to have spent richly in recent months to prop up the national currency.

The banks of the state were also pushed to sell dollars, helping the lira. An economic reduction because of the novel coronavirus pandemic that frapped Turkey just as it was trying to recover from its first recession in a decade.

The central bank of Turkey, which is nominally independent however the target of government pressure often has lowered interest rates to 8.25 percent from 24 percent since July last year, and this creates anxiety of many foreign investors.

                                 

President Recep Tayyip Erdogan has appealed many times for lower interest rates to enhance growth at the expense of reining in inflation. He called high rates the mother and father of all evil.

Moreover, the annual inflation rate of July was 11.76 percent, down from 12.62 percent in June, based to official data, however, remain well above the own year-end inflation target of the government of 8.5 percent.

The Turkish economy was hit by a coin crisis in 2018 because of the tensions rise with its NATO ally the United States; this pushed to an emergency rate hikes by the central bank.

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