After knowing the announcement of the Central Bank, The Turkish lira depreciated 2.6% to its lowest historical level against the US dollar, at 9.45 lira to the dollar. Against the euro, the lira lost 2.5% to 11.02 units, also its lowest level so far.
Sahap Kavcioglu, the current president of the Central Bank, is under increasing pressure from the Turkish president, the conservative Islamist Recep Tayyip Erodgan, who demands lower interest rates to combat inflation, when traditional economists propose to do the opposite. A few weeks ago, Erdogan fired two deputy governors and a member of the central bank’s monetary policy committee.
Analysts and international markets consider these interferences by the Turkish Government a danger to the independence of the Central Bank.
In March, the Turkish president fired Naci Agbal, the third governor of the central bank to resign in less than two years, and replaced him with Sahap Kavcioglu, a newspaper columnist who shares the president’s unconventional view that the high guys of interest drive the inflation, instead of slowing it down.
The Turkish lira it is by far the worst emerging currency so far this year. Its price has fallen to the area of $ 0.107, a decrease of more than 20% since the beginning of this 2021 (precisely inflation is touching 20%, according to the latest data). The next currency in the ranking is Romanian lei with a drop of 6% against the dollar. This huge disparity is the result of the turmoil in Turkish finances, which in turn has led the country to record mediocre growth rates for an emerging country in recent years.
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