The Turkish lira fell 1.4% on Tuesday, as investors considered the implications of an increase in inflation in Turkey. This was due to the implementation of a non-orthodox rate-cutting strategy.
After falling to 18.4 in record time two weeks ago, the lira rebounded after the government took steps to support it. As of 0500 GMT on Monday, the lira was at 13.15 to $1. This is a decrease from Monday’s close of 12.96. Turkish Food.
Last year, the lira suffered a 44pc decline, making it the worst-performing emerging market currency. It is the worst performance since President Tayyip Erdogan took power almost two decades ago.
Monday’s data showed that consumer prices rose by 36.08 percent year-on-year in Dec., which was higher than the poll forecast of 30.6 percent. This a due to increased transportation costs and food and drink prices.
Erdogan spoke after Monday’s cabinet meeting, saying he was saddened at the inflation data and that this government was determined to lower it to single figures. He blamed the rise on global commodity prices and a weaker Turkish lira.
Erdogan has pushed a “new economic program” that focuses on exports and credit. Since September, the central bank has reduced its policy rate by 500 basis points to 14 pc.
Erdogan announced a scheme to protect local deposits converted from hard currencies against losses to curb the lira’s weakness. On Monday, Erdogan stated that 6 billion dollars ($78 billion) had been deposited into such accounts.
($1 = 13.1039 liras)