Turkish lira plummets to new low after central bank slashes rates
12/16/2021 (Thu) 04:16:03
>Turkey’s lira crashed to a record low of 13.44 to the dollar on Tuesday, a level once unfathomable and well past what was just last week deemed the “psychological” barrier of 11 to the dollar.
>“Insane where the lira is, but it’s a reflection of the insane monetary policy settings Turkey is currently operating under,” Tim Ash, senior emerging markets strategist at Bluebay Asset Management, said in a note in response to the news.
>The lira was trading at 12.7272 to the greenback at 4 p.m. local time on Tuesday, and was down around 15% on the day at one point, according to Reuters.
>The sell-off was triggered after Turkish President Recep Tayyip Erdogan defended his central bank’s continued contentious interest rate cuts amid rising double-digit inflation. He labeled the move as part of an “economic war of independence,” rejecting calls from investors and analysts to change course.
>Inflation in Turkey is now near 20%, meaning basic goods for Turks — a population of roughly 85 million — have soared in price and their local currency salaries are severely devalued.