Turkish Lira Falls 6 Percent After Rapid Currency Fluctuations Last Week

Turkish Lira
Turkish Lira Image source: middle-east-online.com

Turkish currency has lost 6% of its value against US dollar on Monday following last week rate spikes, according to trading data.

As of 07:40 GMT Turkish lira dropped to 11.33 against US dollar from its previous closing level of 10.9 lira to 1 US dollar.

On December 16, the Turkish Central Bank decreased the interest rate from 15% to 14%, which triggered a sharp depreciation of Turkish currency. On December 20, the exchange rate hit the record with 18.4 lira to US dollar. However, the lira reversed course in the evening registering dramatic increase that offset the losses of previous weeks.

The lira’s rapid growth followed the pledges made by Turkish President Recep Tayyip Erdogan regarding new measures against currency fluctuations. Erdogan said that the government would support lira deposits by compensating any losses that occur from the unstable rate.

The Turkish lira has lost more than 50% of its value over the past year, trading at 6.8 lira against US dollar in February 2020.

Erdogan stands for cutting the interest rate, arguing that it would decrease inflation, accelerate export, and spur economic growth. Since July 2019 he has replaced the central bank chief three times and dismissed two finance ministers since November. Opposition leaders have repeatedly accused him of economic incompetence for plunging the country into an economic crisis and called for early elections. Erdogan brushed aside those claims and reaffirmed that presidential and parliamentary elections in Turkey will be held as planned in July 2023.

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