At noon on Thursday, the Central Bank of Turkey cut interest rates by another 100 basis points to 14%, sending the dollar / pound exchange rate above 15. But the orthodox war of Turkish President Recep Tayyip Erdo έχειan has investors were indifferent as on Friday morning it seemed that nothing could stop the pound’s decline.
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The currency, at 9.36 (Cyprus time), crossed the 16th to the dollar, starting the day with new losses of 2.6%. At 12.44 (Cyprus time) it passed 17, expanding the losses by more than 8%
It is characteristic that in November alone the pound lost 40% of its value, while in the whole year, the Turkish currency has doubled in value against the dollar compared to last year.
The central bank cut in interest rates by 100 basis points, according to forecasts, brought the cumulative easing from September to 500 points, making the currency even less attractive to investors and savers.
The bank signaled that it would stop the relaxation cycle to monitor its results for the next three months.
The central bank is under pressure from Erdogan to cut interest rates to stimulate economic growth. In fact, the Turkish president is in a hurry to “silence” any possibility of disagreement in the TCMB Commission and the Ministry of Finance, as after the recent replacement of the Minister of Finance, yesterday, the Turkish president fired two deputies YPOIK, a few hours before the pre-agreed interest rate cut.
Erdogan’s new economic plan prioritizes exports and lending, although economists and opposition lawmakers have widely criticized the policy as reckless. With inflation soaring above 21%, the pockets of Turkish citizens have become holes even if there are pounds in it, as the currency may have some value as a metal.
The central bank has intervened in the foreign exchange market four times in the last two weeks, selling dollars to slow the fall of the pound and consuming its already depleted foreign exchange reserves, in moves that from the beginning were to have negligible results, with many commenting that Turkish president orders TCMB to simply “burn” money.