Ankara Foreign Currency Exchange Store (November 23) ｜ Burhan Ozbilici / AP Photo
Turkey’s currency, Lira, plunged 15% on November 23, approaching its all-time low. Turkey is suffering from inflation, but the president has taken an unusual policy of cutting interest rates, which is believed to be the cause of the currency depreciation. Citizens who can’t trust the government are hoarding expensive goods such as the iPhone and buying safe currencies, raising anxiety.
◆ Unconventional policy Interest rate cuts despite inflation
In Turkey, investors have tossed lira and are in a new currency crisis as the central bank makes an unusual decision to cut interest rates to curb inflation. Lira was stable on the 24th, but its value has been lost by 40% since the beginning of this year. Since September, interest rates have been reduced from 19% to 15%. However, inflation in October was as high as 20% year-on-year. (CNN)
The Turkish lira has been on a downtrend since early 2018 due to geopolitical tensions with the West, current account deficits, shrinking currency reserves, accumulated debt and, above all, refusal to raise rates to cool inflation. I’m following. (CNBC)
