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The Turkish lira collapses against the dollar and has its worst day in 8 months

The Turkish lira collapses against the dollar and has its worst day in 8 months

The lira was down 0.5% from its close of 20.0990 on Monday, when it had its worst day for markets in eight months. The lira has plunged 7.3% since the start of the year and has lost more than 90% of its value in the past decade.

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The Turkish lira hit a fresh record low of 20.2 against the dollar on Tuesday, extending its losses after the President Tayyip Erdogan will win the second round of the presidential elections on Sunday, which will allow him to start a third decade in government.

The lira was down 0.5% from its close of 20.0990 on Monday, when it had its worst day for markets in eight months. The lira has plunged 7.3% since the start of the year and lost more than 90% of its value in the past decade, with the economy mired in sharp boom-bust cycles and bouts of runaway inflation.

The opinion of the analysts

Recep Tayyip Erdogan consolidated his political hegemony by being elected for another term as president of Turkey, despite the fact that the economy is not going in the same direction as the voters, because the lira touched a new historical floor today and a growth of 2 is expected .9%, almost half that in 2022, and accumulated inflation is 43.4% in the interannual measurement.

The Turkish lira will continue to weaken against the dollar as long as “unsustainable economic policies” persist, Experts and the European credit rating agency Scope Rating agreed today.

The president has held the Turkish presidency since 2014 and thus achieves his third consecutive term, which will allow him to remain in power for a quarter of a century and deepen his conservative imprint on Turkish society.

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TREND.  In September 2019, the Turkish lira was trading at 5.6 to the dollar.  Yesterday it closed at 13.45.

TREND. In September 2019, the Turkish lira was trading at 5.6 to the dollar. Yesterday it closed at 13.45.

“The weakness of the lira is affected by high inflation with low domestic interest rates. The lira is likely to continue to weaken against the dollar, but if the current inflation trend continues, the weakening of the currency will slow down,” Evstiféev qualified, quoted by the Russian news agency Sputnik.

The chief macroeconomist of the Ingosstrakh-Investments company, Anton Prokudin, estimated that the Turkish currency depends on two factors: the current account and the intervention of the Turkish Central Bank, which stopped devaluation by actively selling currencies before the elections.

According to the macroeconomist of this Russian investment mega company, “the collapse of the lira was inevitable, and Erdogan may aggravate the situation, if he continues to squander international reserves.”

Source: Ambito

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