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  • The Turkish lira has fallen by more than 6% after the statements of the Turkish president
Ekonomické zprávy
20.12.2021

The Turkish lira has fallen by more than 6% after the statements of the Turkish president

The Turkish lira continued to decline on Monday, and updated a record low against the US dollar against the background of a statement by Turkish President Erdogan, who promised a further reduction in interest rates, citing the Islamists' ban on usury as the basis of his policy.

The USD/TRY has grown by 6.2%, and is now trading at 17.43 compared to 7.43 at the beginning of this year. Over the past three months, the lira has lost almost half of its value.

"We will continue to reduce rates. As a Muslim, I will continue to do what Islamic teachings demand," Erdogan said. He added that the fall of the lira was the result of an economic siege, and warned that Turkey would not abandon its current policy.

The Turkish currency has lost about 57% of its value this year, including 37% in the last 31 days, which has seriously alarmed the largest emerging market economy.

"Lower real rates, weakening fundamentals and tightening global financial conditions will lead to a further fall in the lira, if Erdogan does not change course”, - analysts at Danske Bank said.

According to Erdogan, Turkey can free itself from dependence on foreign capital flows by abandoning the policy of higher rates. He believes that lower interest rates will also restrain the growth of consumer prices, which contradicts the opinion of the heads of the world's central banks.

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