Turkish lira lurches towards record low despite central bank moves

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An exchange office worker counts Turkish lira banknotes in Istanbul. AFP PHOTO / OZAN KOSE / AFP PHOTO / OZAN KOSE

The Turkish lira lurched back towards a recent record low on Wednesday despite moves by the central bank, including hikes in interest rates totaling 450 basis points and simplification of the operational framework of its monetary policy during the last month.

The Turkish lira’s valuation against the US dollar today fell behind its value on May 23 when the Turkish Central Bank decided to raise interest rates by 300 basis points.

Deputy Prime Minister Mehmet Şimşek, the economy guru of Turkey, had said on June 3 the lira’s valuation against the dollar was under control.

On Monday the Turkish Statistics Institute (TurkStat) announced the economy had expanded 7.4 percent in the first quarter of the year over the same period last year.

Economists think the lira’s loss in value will continue due to stress stemming from upcoming elections on June 24, apart from foreign factors such as a possible interest rate hike by the US Federal Reserve at a meeting scheduled for today.

The lira was recorded at 4.65 to the US dollar on Wednesday.

Also, Turkey’s dollar-denominated government bonds tumbled for a fourth straight day on Wednesday, Reuters reported.

Ankara’s 2038 maturing bond saw the biggest fall with a 1.3 cent drop, while the prices of its 2020, 2021 and 2022 maturing bonds were all close to record lows.

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