On Monday, the Turkish currency weakened to another record low dropping below 14 lira per US dollar amid investor concerns ahead of a policy-setting central bank meeting later this week. The lira fell by 4.2% to trade at 14.4741 against the greenback at 10:09 a.m. Istanbul time, marking a new intraday low. So far this year, the lira has lost 47% of its value.
According to a Reuters poll, the country’s monetary regulator is expected to meet on Thursday to slash the key interest by 100 basis points to 14% despite soaring inflation of more than 21%. Since September, Turkey’s central bank has cut the key interest rate by 400 basis points. Over the past two years, the regulator has intervened three times to keep the lira afloat by selling dollars.
The currency is now worth about half its value at the beginning of the year.
President Recep Tayyip Erdogan has pushed the central bank to keep cutting rates despite surging inflation.
Economists surveyed by Reuters expect the Turkish central bank to reduce its main interest rate from 15% to 14% on Thursday. It would be the fourth such cut in as many months.
The president and his allies argue that lower interest rates will boost Turkish exports, investment and jobs. But many economists say the rate cuts are reckless.
