Turkey’s currency rushes from low to low. After another cut in the key interest rate, the lira fell significantly again. However, the massive loss in value is politically intentional.
The Turkish lira continued to fall on Friday after hitting a record low on Thursday. At times, almost 17 lira had to be paid for one US dollar. 19.22 lira were due for 1 euro.
The decline of the Turkish currency is politically intentional and a consequence of Ankara’s financial policy. On Thursday, the local central bank lowered the key rate again despite high inflation and ongoing pressure on the local currency. Once again, she stood behind the controversial economic policy of Turkish President Recep Tayyip Erdogan. Contrary to popular belief, he is of the opinion that high interest rates cause inflation instead of combating it. The central bank announced that the key interest rate will be reduced from 15 to 14 percent. It is the fourth rate cut in a row despite the high inflation rate of more than 21 percent.
The Turkish lira reacted immediately to the rate cut
The lira reacted immediately and gave way on Thursday. For the first time, more than 15 lira had to be paid for one US dollar, and for the first time more than 17 lira were due for one euro. The decline in the value of the Turkish national currency continued on Friday. Since the beginning of the year it has lost around half of its value against the dollar and the euro.
Also on Thursday, Erdogan announced a good 50 percent increase in the minimum wage for the coming year to 4,250 lira net – the equivalent of around 240 euros. The minimum wage for 2021 is 2,825 lira net (around 160 euros). With this increase, the government wants to prove that it does not want the workers to suffer in view of the price increases, Erdogan said.
At the same time, he demanded that the current minimum wage should not be compared with the rates of the past, after all people did not earn in dollars back then either. “There are some problems at the moment,” but they want to overcome them as quickly as possible, as well as the “uncertainty that has recently arisen with the fluctuations in exchange rates and the associated extreme price increases”. Trade unions had in some cases called for the minimum wage to be raised to 5200 lira.
Groceries in Turkey have risen sharply
For the people in the country, life has become considerably more expensive in recent months due to high inflation and the weak currency. Food prices in particular are rising sharply.
Erdogan repeatedly defends his policy against criticism. He speaks of a “new economic model” and believes that a low key interest rate can boost exports. Erdogan also wants to ensure more investment, employment and production with a loose monetary policy. Economic expert Mustafa Sönmez sharply criticized this course. The president did not want to see that he was causing resentment among the citizens, he told the dpa. The Erdogan government insists on “irrational steps” and is pushing the country into the unknown.
Sources: dpa / “”
See in the video: Mesut Özil wins the 2014 World Cup with the DFB-Elf. In 2018 he resigns. He comes under fire for his repeated closeness to Erdogan. What makes the footballer who now lives with his wife and child in Turkey tick? An interview with his longtime advisor Erkut Sögüt.
Source From: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
