The lira fell today as it did Thursday, following the Turkish central bank’s decision to cut interest rates again. For the fifth month in a row.
At its low on Friday, it took 17 lira to buy $1, down an additional 8 percent. Later in the afternoon, there was some recovery to nearly 16.5 lira – though that is still a record low for the Turkish currency.
The country is struggling with a sharp rise in inflation. According to Turkish President Recep Tayyip Erdogan, this is because of the high interest rates, a theory that not many economists agree with.
Erdogan nevertheless demanded an interest rate cut from his central bank, and fired several central bankers who rebelled against his decisions. On Thursday, he also raised the minimum wage in the country in one fell swoop to compensate for inflation.
Pain for the population
Meanwhile, the lira has lost more than half of its value this year. More than 30 percent of them in the past month. An unprecedented decline that is especially painful for the Turkish population and entrepreneurs, for whom life is becoming increasingly expensive. Many people have started hoarding food and other products.
The Turkish stock exchange cannot escape the misery either. The Bist-100, the country’s main index, plunged deep into the red on Friday, closing 8.5 percent lower.