2023-05-30 09:52:00
Since the election decision on Sunday, the price losses have totaled almost two percent. In the past five years, the price has fallen by more than 75 percent.
On Tuesday, the Turkish lira extended the significant price losses from the previous day after the election decision. In the late morning up to 20.35 lira were paid for one US dollar. The Turkish currency has lost a little more than one percent in value since the previous day. Since the election decision on Sunday, the price losses have totaled almost two percent.
The Turkish currency was also under pressure in trading with the euro on Tuesday. At times, 22.35 lira was paid for one euro here, more than ever before. In the past five years, the price has fallen by more than 75 percent.
Turkish President Recep Tayyip Erdogan won the decisive runoff in the presidential election against opposition leader Kemal Kilicdaroglu. According to Commerzbank’s foreign exchange expert Ulrich Leuchtmann, further losses in the lira cannot be ruled out after the election decision.
Experts expect further price losses
“It has been all too obvious that recently the lira exchange rates were not market-made, but the Turkish currency was artificially supported,” said Leuchtmann. Capital controls have been introduced in Turkey, which have supported the domestic currency in recent months. Expert Leuchtmann sees the risk that the Turkish lira will no longer be artificially supported with the same vehemence as before the election.
It cannot be ruled out that the devaluation pressure that has built up over the past few months could be discharged. In recent months, the weak lira has also led to a sharp rise in inflation, which has at times exceeded the 80 percent mark.
“If it is not foreseeable that monetary policy will change, it cannot be expected that Turkey will get its inflation problem under control,” warned Leuchtmann. In the past, President Erdogan had repeatedly advocated lower interest rates in the fight against high inflation and put pressure on the country’s central bank accordingly. This contradicts the conventional wisdom that high inflation is fought by higher interest rates.
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