The Turkish Lira slumped to yet another all-time low today, extending its downfall after the re-election of President Recep Tayyip Erdogan.
Jump To
Turkish Currency Falls To An All-Time Low
The currency was last trading at 20.29 against the US dollar in the morning. Lira has lost more than 7% of its value since the start of the year, as per a CNBC report. The Turkish currency has slumped 25% in the last year and 90% over the past decade.
The recent fall comes after Turkey’s Election Board confirmed on Sunday that Erdogan has won Turkey’s 2023 presidential election with 52.14% of the votes.
A depreciation in the local currency increases the prices of imported goods for import-reliant Turkey, and a weak lira would mean that many of Turkey’s households and domestic businesses would be hit.
istock
President Erdogan’s re-election extends his rule into a third decade, granting him five more years to pursue increasingly authoritarian policies that have polarised Turkey, which is grappling with a cost of living crisis, a plunging currency, and depleted foreign reserves, as per a Reuters report. He had earlier served as Turkey’s Prime Minister from March 14, 2003, to August 28, 2014, and then became President.
Investors, especially foreign ones, have been losing confidence drastically, which is resulting in the dumping of whatever little Lira currency they held previously. Hence, the Turkish lira is in free fall, and the re-election of Erdogan further raises economic tensions.
Erdogan’s unorthodox policies have been ineffective as well as expensive, with the central bank spending nearly $200 billion over the past year and a half to prop up the lira, net foreign-exchange reserves turning negative, and inflation soaring above 80% last year before falling to 44% in April.
Also Read: How Turkey’s Currency Crisis Is Hurting Your Favorite Nutella
Lira Expected To Fall Further?
AP
US investment bank Morgan Stanley had predicted recently that the Turkish currency would drop further this year, reaching 26 or even 28 to the dollar more quickly than previously anticipated, as per The Guardian report. Wells Fargo & Co. expects the currency to hit 23 by the end of the quarter.
Turkey’s trade deficit in April widened 43.9% year-on-year to $8.85 billion. May’s figure is set to be released at 3 p.m. local time. Istanbul’s main index, the Turkey ISE National 100, gained roughly 1.39% in its first hour of trade amid the lira’s fall.
Meanwhile, Goldman Sachs analysts stated in a research report that, following the run-off election results, the focus for the market will continue to be on the central bank’s foreign currency reserves and the lira. “International reserves have continuously fallen since the beginning of the year and are close to levels when previously TRY [Turkish lira] volatility sharply increased,” the investment banks’ analysts wrote, as mentioned in the CNBC report.
Also Read: Why BRICS Nations Are Creating A New Currency
For the latest and more interesting financial news, keep reading universo virtual Worth. Click here