{"id":123548,"date":"2021-11-30T17:50:02","date_gmt":"2021-11-30T17:50:02","guid":{"rendered":"https:\/\/fin2me.com\/?p=123548"},"modified":"2021-11-30T17:50:02","modified_gmt":"2021-11-30T17:50:02","slug":"turkish-lira-slides-to-fresh-record-low-after-president-erdogan-doubles-down-on-rates-policy","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/turkish-lira-slides-to-fresh-record-low-after-president-erdogan-doubles-down-on-rates-policy\/","title":{"rendered":"Turkish lira slides to fresh record low after President Erdogan doubles down on rates policy"},"content":{"rendered":"<ul>\n<li>The lira&#x27;s spiral has been staggering \u2014 it plummeted from roughly 8.5 to the dollar in late August to more than 13 to the dollar within a mere three months.<\/li>\n<li>&quot;I have never advocated and won&#x27;t be advocating for interest rate increases,&quot; Turkish President Recep Tayyip Erdogan said over the weekend.<\/li>\n<\/ul>\n<p>The Turkish lira slid to a new record low on Tuesday after fresh statements from Turkish President Recep Tayyip Erdogan opposing any interest rate increases.<\/p>\n<p>The currency hit a low of 13.47 to the dollar in late afternoon trading, surpassing its previous record low last week of roughly 13.45 to the greenback, following renewed worries over the country&#x27;s monetary policy and concerns over the Covid-19 omicron variant. <\/p>\n<p>The lira&#x27;s spiral has been staggering \u2014 it plummeted from roughly 8.5 to the dollar in late August to more than 13 to the dollar within a mere three months.<\/p>\n<p>Erdogan has consistently refused to raise interest rates to reign in rising double-digit inflation, and the lira has plummeted in value in recent years largely as a result of that. Inflation in Turkey is now near 20%. Erdogan has fired three central bank chiefs for not aligning with his belief that rates should not be raised.<\/p>\n<p>&quot;I have always been arguing for lower interest rates and repeating that the rates should be lower. I have never advocated and won&#x27;t be advocating for interest rate increases,&quot; Erdogan was reported by Turkish press as saying on Sunday.<\/p>\n<p>Economic experts and former officials in the country have openly pleaded for the president to change course, as it&#x27;s commonly accepted that he in fact has power over the central bank&#x27;s monetary policy decisions rather than the bank being independent. But Erdogan has long held the unusual belief that higher interest rates cause inflation, rather than bring it down.<\/p>\n<p>&quot;Interest rates are the reason, inflation is the result. My argument hasn&#x27;t changed, I still defend it, believe in it,&quot; the president said.<\/p>\n<p>Investors seem to hold a very different view, if the dramatic sell-off last week that brought the lira to its latest record low is anything to go by. The lira &quot;is now firmly in crisis territory,&quot; analysts at London-based Capital Economics wrote at the time, adding that &quot;higher inflation and tighter domestic financial conditions are likely to sap Turkey&#x27;s recovery.&quot;<\/p>\n<h2>Lira crisis casts shadow over positive GDP growth<\/h2>\n<p>Turkey reported positive GDP growth figures this week, but the pain of a weakened currency outweighs that positive news, said Tim Ash, senior emerging markets strategist at BlueBay Asset Management.<\/p>\n<p>&quot;Lower rates might deliver high real GDP growth but at the price of a weaker currency, higher inflation and longer term concerns about macro financial stability,&quot; Ash wrote in a note Tuesday.<\/p>\n<p>Turkey&#x27;s GDP growth was an impressive expansion of 7.4% in the third quarter year-on-year, and 2.7% expansion from the previous quarter, driven by household and government consumption and exports. But the currency crisis and soaring inflation mean that those figures are far from the full picture.<\/p>\n<p>&quot;We think that the GDP figures released today tell us little about the pace of economic activity going forward as the recent sell-off in the Lira is likely to impact economic activity significantly,&quot; analysts at Goldman Sachs wrote.<\/p>\n<p>Nevertheless, the bank is revising its 2021 growth forecast upward by 1 percentage point to 10.5%. At the same time, Goldman is revising down its 2022 growth forecast by half a percentage point to 3.5% year-on-year.<\/p>\n<p>There were also unconfirmed reports Tuesday from local media that the Turkish central bank&#x27;s head of markets Doruk Kucuksarac<strong> <\/strong>had resigned, someone Ash described as a &quot;credible&quot; figure. The resignation has not been officially announced.<\/p>\n<p>Source: <a href=\"https:\/\/www.cnbc.com\/2021\/11\/30\/turkish-lira-slides-after-erdogan-doubles-down-on-rates-policy-.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The lira&#x27;s spiral has been staggering \u2014 it plummeted from roughly 8.5 to the dollar in late August to more than 13 to the dollar [&#8230;]<\/p>\n","protected":false},"author":3,"featured_media":123547,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Turkish lira slides to fresh record low after President Erdogan doubles down on rates policy - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/markets\/turkish-lira-slides-to-fresh-record-low-after-president-erdogan-doubles-down-on-rates-policy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Turkish lira slides to fresh record low after President Erdogan doubles down on rates policy - 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