Turkish lira hits record low, dragging central bank to the rescue

651
0

The Turkish lira hit a record low of 14.99 to the US dollar on Monday before the central bank intervened in the foreign exchange market, gripped by worries over President Recep Tayyip Erdoğan’s risky new economic policy and prospects of another rate cut, Reuters reported.

The central bank said it had entered the market to sell dollars for the fourth time in two weeks.

The bank moved to keep the lira below 14 last week but abandoned that level on Monday.

Depreciation prompts inflation in the country, which depends heavily on imports.

The country has been rattled after 400 basis points of interest-rate cuts since September.

The interventions are an additional risk for a central bank that is not only easing policy in the face of rising inflation but that also has depleted foreign reserves.

According to calculations of bankers analyzing official data, the central bank sold $1.5-2 billion on Monday alone, following sales worth $2.5 billion in the first three efforts.

By 1547 GMT, the lira had trimmed losses in thin market trading to 13.79 — its strongest point on the day, but still down 31 percebt since the beginning of last month.

In response to the market turmoil, Erdoğan held talks with Central Bank Governor Şahap Kavcıoğlu, Finance Minister Nureddin Nebati and the heads of state banks in İstanbul.

Any decisions from the meeting were not clear, and no announcements were made.

Liked it? Take a second to support Turkish Minute on Patreon!