Lira plunges to historic low ahead of election day

Lira plunges to historic low ahead of election day

2023-05-26 16:10:24

UThe local currency, the lira, is trading at an all-time low just ahead of the crucial second round of Turkey’s presidential elections on Sunday. More than 20 lira per dollar had to be paid on Friday. For a short time, the dollar rose in value to as much as 20.12 lira on the foreign exchange market. One euro cost 21.50 lira.

Andreas Mihm

Business correspondent for Austria, Central and Eastern Europe and Turkey based in Vienna.

Analysts suspected renewed intervention by the central bank, which has slowed the decline in the currency, which is under pressure from high inflation and low interest rates, to 6.5 percent since the beginning of the year. It has spent $177 billion to stabilize the lira in 16 months, according to Bloomberg Economics estimates. According to official data, the country’s net currency reserves are currently showing a deficit of 150 billion dollars.

Erdogan admitted that the central bank had been temporarily supported with capital from the Gulf States, and Russia has deferred gas bills of over 600 million euros. Experts interpret the turning away of investors as growing uncertainty about Turkey’s future financial policy, which President Recep Tayyip Erdogan had decreed low interest rates with credit expansions despite high inflation of more than 43 percent recently. He had announced during the election campaign that he intended to continue this policy after the expected re-election.

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