Turkish lira at its lowest level since it was introduced in 2005
Turkey’s economic problems are reducing Erdogan’s chances of re-election
Which: via REUTERS
Unlike other major economies, Turkey is not responding to rising prices by raising key interest rates. In fact, the key interest rate of the Turkish central bank has actually fallen from 14 to 8.5 percent since August.
KWith less than a month to go before Turkey’s presidential and parliamentary elections, the national currency has fallen to its lowest level in history. This is reported by the AFP news agency. On Tuesday, the exchange rate in New York City stood at 19,5996 Turkish lira to one dollar. Since its introduction in January 2005, the new Turkish lira has never been worth so little.
The Turkish national currency has drastically lost value since the end of 2021. The government under President Recep Tayyip Erdoğan in Ankara therefore decided to take support measures again. However, these had “failed”, judged on Tuesday the financial analyst Mike Harris from the consulting firm Cribstone Strategic Macro.
Although inflation in Turkey has been declining steadily over the past five months, it was still at 50.51 percent yoy in March. Unlike other major economies such as the USA, however, Turkey is not counteracting the rise in prices by raising key interest rates.
In fact, the key interest rate of the Turkish central bank has actually fallen from 14 to 8.5 percent since August. This came under pressure from Turkish President Recep Tayyip Erdogan. Contrary to prevailing economic theories, he believes that high interest rates encourage inflation.
Erdogan’s most promising challenger in the presidential election on May 14 this year, Kemal Kilicdaroglu, promises that if he wins the election, he will pursue a currency policy based on internationally accepted doctrine and restore the independence of the Turkish central bank. However, Turkey’s economic problems are reducing Erdogan’s chances of being re-elected. In recent polls, Kilicdaroglu has a slight lead over Erdogan.