Problems in international trade are also causing problems for Turkish citizens due to the country’s faltering economy, as according to an article in the newspaper Sozcu, they no longer accept Turkish business credit cards in Britain.
According to SKAI, the sharp fall in the pound exchange rate is causing problems, with the Turks fearing the worst, meaning that the same will happen to the EU.
Today, the Turkish pound fell to a new low after the Central Bank (TCMB) decided to reduce interest rates again, by 100 basis points, to 14%, at the request of President Recep Tayyip Erdogan.
The pound has lost more than 2.5% since the morning, passing the 15 to the dollar, losses that accelerated after the decision of central banker Sahab Kavtzioglou. It then traded at 15.5 against the dollar, with losses of more than 5%.
The Turkish Central Bank cut interest rates by 400 points to 15% this year, causing the pound to lose more than 51% of its value against the dollar. The currency is by far the emerging market (EM) currency with the worst performance in 2021.
Erdogan’s repeated changes to central bank members, along with the resignation of Finance Minister Lutfi Elvan this month, have hurt investor confidence in Turkey’s foreign exchange and debt markets, according to Reuters. This did not stop Erdogan, who fired two deputy finance ministers on Wednesday night.
The weakening of the pound triggers inflation, increasing the cost of importing essential goods such as medicines, certain foodstuffs and gas, expressed in dollars and euros.
Official data for November showed that inflation in Turkey reached 21.3% compared to a year ago, although analysts estimate that it is probably higher.
The same time, Turkish president prepares raises to “gild the pill” to Turks, as the minimum wage in Turkey now stands at $ 186.
Turkish companies and banks have significant foreign currency debts, which become more difficult to repay as the pound plummets. S&P Global Ratings changed its outlook for Turkey from negative to stable last week. The rating agency noted that recent interest rate cuts and the devaluation of the pound are likely to further stimulate inflation.
Read also:
* New slump in Turkish pound – Erdogan fires after midnight
* Turkish professor: Erdogan may declare state of emergency due to financial crisis
* New sudden drop of 7% for the Turkish pound – New intervention by the central bank
* “So far” say the Turkish health workers: They are on strike and demand money and better working conditions
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Source From: Capital
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