Turkish Lira Nears Record Low after Interest Rates Decreased
One day after Turkey's Central Bank's decision to lower interest rates, the Turkish Lira is approaching its record low levels.
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A currency exchange office (Archive)
The Turkish lira nears record low on Friday, with foreign investors moving away from the country. However, some local bargain hunting mitigated the losses after Turkey's Central Bank cut its policy rate and gave no hints as to how low the rates might go.
The lira, which has been experiencing sharp swings during the past few years, touched 8.86 to one dollar, near its low of 8.88, which it had reached in June.
The Central Bank's cut put the interest rates below the annual inflation rate, which was 19.3% in August. This means that the stimulus that has been long sought by President Erdogan has been delivered, reinforcing analysts' worries over political interference.
The Central Bank still hasn't provided much guidance on the future path of this policy, yet large finance firms, such as Societe Generale, Barclays, JPMorgan, and Goldman Sachs all said they expect more rate cuts in the coming months.
The lira's fate is now largely in the hands of local businesses, investors, and savers after foreign funds have now fled from Turkey.
Almost a week ago, the Turkish lira lost about 2.5% of its value, driven by expectations that the US monetary stimulus would be reduced sooner than expected.
