Turkish lira slumps further to new record low
The Turkish lira has fallen to a new record low amid fears that the central bank will make a further cut in interest rates later this week.
At one point, it was down nearly 7% at just under 15 to the dollar, but it recovered slightly after the bank intervened in the market to prop it up.
The currency is now worth about half its value at the beginning of the year.
President Recep Tayyip Erdogan has pushed the central bank to keep cutting rates despite surging inflation.
Economists surveyed by Reuters expect the Turkish central bank to reduce its main interest rate from 15% to 14% on Thursday. It would be the fourth such cut in as many months.
The president and his allies argue that lower interest rates will boost Turkish exports, investment and jobs. But many economists say the rate cuts are reckless.
Last month, the country's inflation rate hit 21.7%.
The BBC's Victoria Craig in Istanbul says taxi drivers, food sellers and hotel patrons have all expressed surprise and anger as they see the value of the money in their pockets drop by the day.
Normally, central banks raise rates to combat rising prices, but Mr Erdogan has called such tools "the mother and father of all evil".
Although the bank has attempted to bolster the value of the lira by using its dollar reserves to buy the currency, analysts say it does not have enough firepower to stop the slide.
"We doubt that either intervention or a balanced current account will be effective in stabilising the currency," said investment bank Morgan Stanley in a note.
It added that the central bank's relatively thin reserves meant interventions could turn out to be counter-productive.
The currency is now worth about half its value at the beginning of the year.
President Recep Tayyip Erdogan has pushed the central bank to keep cutting rates despite surging inflation.
Economists surveyed by Reuters expect the Turkish central bank to reduce its main interest rate from 15% to 14% on Thursday. It would be the fourth such cut in as many months.
The president and his allies argue that lower interest rates will boost Turkish exports, investment and jobs. But many economists say the rate cuts are reckless.
Last month, the country's inflation rate hit 21.7%.
The BBC's Victoria Craig in Istanbul says taxi drivers, food sellers and hotel patrons have all expressed surprise and anger as they see the value of the money in their pockets drop by the day.
Normally, central banks raise rates to combat rising prices, but Mr Erdogan has called such tools "the mother and father of all evil".
Although the bank has attempted to bolster the value of the lira by using its dollar reserves to buy the currency, analysts say it does not have enough firepower to stop the slide.
"We doubt that either intervention or a balanced current account will be effective in stabilising the currency," said investment bank Morgan Stanley in a note.
It added that the central bank's relatively thin reserves meant interventions could turn out to be counter-productive.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
