Thread by @Xy5Z89

-Threade-

#Turkey #Ankara #Lira #ECONOMY #Intrestrates

The subdued economic outlook for the Fed, on the other hand, was less well received by the market. According to the Bloomberg news agency, the Fed fueled the flight to “safe havens”, which hurt one currency in particular -

the Turkish lira. The US Federal Reserve made it clear on Wednesday evening that it would not touch interest rates until the end of 2023. The lira recently continued its most recent series of losses against the US dollar.

On Thursday the rate fell to 7.5574 lira per dollar, making the Turkish currency cheaper than ever against the American greenback. The lira had lost against the dollar on 13 of the last 14 trading days. The decline continued on Friday, albeit more slowly.

The common currency, the euro, also went downhill. After a significant minus on Thursday, the lira continued to lose at the end of the week. On Friday, the exchange rate temporarily fell to 8.9550 lira per euro, another record low.

The next negative record threatens with this drop in the rate: If the lira continues to weaken, the euro could break the nine lira per euro mark for the first time. Meanwhile, the Turkish banking system continues to do everything possible to halt the decline -

apart from the interest rate hikes that many experts believe are necessary. According to Bloomberg, the country's state banks spent $ 500 million in foreign currency reserves on Thursday alone to prop up the lira. The news agency cites two insiders who did not want to be named.

In general, the state-owned banks in Turkey do not comment on interventions in the foreign exchange market. However, it is no secret that practically all banks there are called on by the supervisory authorities to have a positive effect on the lira exchange rate.

President Recep Tayyip Erdogan is a declared opponent of high interest rates. In his view, low interest rates are fueling the economy, which should ultimately fix all of the country's economic problems.

At the September 24 meeting, the CBT will have the next opportunity to turn rates up. The key interest rate in Turkey is currently 8.25 percent, almost four percentage points below the inflation rate. In order to fight inflation without increasing interest rates,

the CBT recently cut off liquidity. According to Bloomberg, the cost of borrowing rose an average of 10.3 percent. However, this rate is also below inflation. In addition, the continuing decline in the lira shows that this measure is not having the desired effect either.

Some banks say that Turkey will not survive this crisis without the help of the IMF.