France News

Despite political concerns, the Turkish lira rebounds from historical lows Reuters-zimo news

© Reuters. In this illustration taken in Istanbul, Turkey on November 23, 2021, a U.S. dollar bill is next to the Turkish Lira banknote. REUTERS / Murad Sezer / Illustration

Authors: Daren Butler and Nevzat Devranoglu

ISTANBUL (Reuters)-The Turkish lira rose to 7% on Wednesday, after falling to historical lows the day after President Tayyip Erdogan’s defense of interest rate cuts, but volatility and sharp price increases remained It worries consumers and investors.

Before Wednesday, the currency’s exchange rate against the U.S. dollar had hit a record low for 11 consecutive trading days, with a decline of 45% this year, and about half of the decline occurred at the beginning of last week.

However, the British pound rose to 11.6 against the US dollar on Wednesday afternoon and then fell from 12:00 to 13:18 GMT, still down 38% from the end of last year.

Bankers said that, driven by panic dollar buying, liquidity almost dried up and fell to Tuesday’s all-time low of 13.45.

Many Turks are already fighting with inflation of around 20% and they worry that price increases will accelerate -11- 23. Opposition politicians accused Erdogan of dragging the country into crisis.

Retailers are also in chaos, and some websites stop selling electronic products -after-read-2021- 11-24 Wednesday.

A sales representative of an Apple Store in Istanbul (Nasdaq 🙂 said that people treat electronic products as investment and use items. “This is very surreal for the economy and everything, but people see it as a kind of Store of value,” the representative said.

Although Erdogan defended the central bank’s monetary policy and promised to win his “War of Economic Independence”, those who called for action to reverse currency devaluation were generally criticized, including the understanding of the best economists.

There is no sign that the intervention will stimulate the currency. The central bank said on Tuesday that it can only do so if there is “excessive volatility.”

“According to today’s exchange rate, the official inflation rate in the next few months may exceed 30%. Based on the current deposit interest rate, this means that the real interest rate is -15%,” former central bank chief economist Hakankara tweeted ( NYSE:) wrote on it.

“If urgent action is not taken, the financial system will not be able to respond,” he added.

Erdogan pressures the central bank to enter a radical easing cycle to stimulate exports, investment and employment .

But many economists called the rate cuts reckless, and opposition politicians called for an immediate general election. The Turks told Reuters that the dizzying currency collapse is shaking their families and Their planned budget is for the future.

“Deviation from orthodox policies has a major impact on the economy,” said Selva Demiralp, director of the Economic Research Forum of Koc-TUSIAD University and a former Federal Reserve economist.

“There is an easing cycle on paper, but it will have a net contractionary impact on the economy,” she said, commenting on interest rate cuts and apparent indifference to the devaluation of the pound.

After Erdogan met with Sahap Kavcioglu, governor of the central bank, the bank issued a statement saying that the sale was “impractical and completely out of” economic fundamentals.

Two sources said that Kavsioglu held preliminary talks with UAE officials at the Presidential Palace on a possible swap agreement on Wednesday.

Tuesday’s decline was the largest decline in the pound sterling since the peak of the currency crisis in 2018, which led to a deep recession and three years of below-average economic growth and double-digit inflation.

Since September, the central bank has cut interest rates by a total of 400 basis points, and the real yield is negative, because almost all other central banks have either begun to tighten policies to curb rising inflation or are prepared to do so.

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Translate »

Adblock Detected

Please unblock the ad blocker.