Turkey to use 'all available' tools as currency plunges
Turkey’s Central Bank says it's ready to use “all available instruments” to calm the market as the Turkish lira drops to new depths, and an interest rate hike is one of the most obvious.
Turkey’s Central Bank said today that it was ready to use “all available instruments” to reduce market volatility as the Turkish lira slid to record lows against the dollar and the euro.
“Targeted additional liquidity facilities will be phased out amid normalizing economic activity as of early August, the bank said in a statement that was apparently aimed at calming rising market jitters.
The lira traded at over 7.28 against the dollar today, a historic low, marking a 20% decrease in its value against the greenback this year.
Many economists say a rate hike is one of the most obvious and immediate tools to prevent the lira’s meltdown. But there are few signs so far that Turkish President Recep Tayyip Erdogan, who is viscerally opposed to raising interest rates, will let that happen. Erdogan believes that high rates cause inflation and sacked the former Central Bank governor, Murat Cetinkaya, last summer for challenging the president’s unorthodox views.
