LAST UPDATE 16:37
The Turkish pound fell again by 7% near a new record low of 15 pounds against the dollar amid concerns over President Erdogan’s risky new economic policies and the possibility of a new cut in interest rates. Thursday.
The fall of the pound led to a new intervention, on Wednesday within two weeks, by the Central Bank in the foreign exchange market, with the purchase of dollars in order to support the local currency, thus significantly reducing the losses recorded so far by the Turkish pound.
The sudden slide left the currency at half its value at the end of last year, fueling inflation in a large emerging market economy, which is heavily dependent on imports.
“The apparent relative stability of the pound last week was artificial and unsustainable. We are now seeing the accumulated pressure unfold, taking the pound’s weakness to the next level,” Commerzbank analysts said in a statement.
“Any further attempt … to stabilize the pound with interventions is likely to fail,” the analysts said.
The central bank had previously kept the pound below the 14 level, intervening in the foreign exchange market three times in the last two weeks by selling dollars.
The pound fell today to 14.99 against the dollar, losing 7.3% since closing on Friday.
It recovered partially a little later and formed at 14.2895 against the dollar.
The Turkish central bank is expected to cut interest rates again by 100 basis points to 14% this week, despite inflation jumping to 21.3% last month.
Investors and those with savings are worried about the recent aggressive monetary easing by the central bank following pressure from President Erdogan, which has cut interest rates by six basis points since September.
Erdogan has repeatedly called for interest rate cuts as he launches a new economic plan that prioritizes economic growth, credit, production and exports, despite widespread criticism of the policy by economists and opposition politicians.
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Source From: Capital
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