Middle East

Turkish lira value plunges by 15% following rate cut announcement

22:04, 23 November 2021
Turkish lira value plunges by 15% following rate cut announcement Photo: Dennis Jarvis from Halifax/wikipedia.com

The value of Turkey’s national currency lira dropped by 15% even after the President of the country Recep Tayyip Erdogan announced that Turkey will cut rates.

Despite the economical crisis the President is still keen on continuing the "economic war of independence” at any cost.

The lira has been in a downward trend for a while as it has lost 45% of its value starting from the beginning of the year.

Almost 26% being the plug that started last week.

Erdogan said that he believes the country would increase export and foreign investment following the rate cuts, however this has backfired in a rapidly rising inflation with basic needs items sometimes even doubling in price.

The central bank is currently not intervening as its officials have said that measures could be taken only in “excessive volatility” conditions.

The former head of the central bank Semih Tumen disagreed with Erdogan’s policy  and was dismissed from his post.

"This irrational experiment which has no chance of success must be abandoned immediately and we must return to quality policies which protect the Turkish lira's value and the prosperity of the Turkish people," he said in a statement.

Rates has been reduced by the central bank by about 400 points since September.

Considering the absence of steps from the government the crisis is likely to continue.