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Lira’s decline prompts intervention by Turkey’s central bank

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The Turkish Central Bank said it intervened in the foreign exchange market on Friday to sell dollars as the lira again neared a record low on persisting concerns about President Recep Tayyip Erdoğan’s low interest rate policy, Reuters reported.

It was the third time in 10 days that the bank announced an intervention, despite depleted reserves, due to “unhealthy price formations.” The previous two moves were last week and kept the lira below 14 to the dollar.

The lira stood at 13.88 to the US currency at 1118 GMT, 0.55 percent weaker than Thursday’s close. It had weakened as far as 13.95 in midday trade before the intervention, close to its all-time low of 14.00 hit last week.

A central bank survey of market participants on Friday showed one of the biggest ever monthly rises in expectations for inflation. Annual consumer price inflation was seen at 23.85 percent at the end of the year, up from a forecast of 19.31 percent a month earlier.

Investors are concerned about recent aggressive monetary easing under which the central bank has slashed its policy rate by 400 basis points since September.

Erdoğan has repeatedly advocated for the rate cuts as he promotes a new economic plan prioritizing economic growth, production and exports, despite widespread criticism of the policy from economists.

He said after a cabinet meeting this week that financial market volatility will eventually stop, blaming price increases on greed and import prices.

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