Turkish lira plunges to new all-time low

The Turkish currency weakened to another record low on Monday, dropping below 14 lira per US dollar amid investor concerns ahead of a policy-setting central bank meeting later this week.

The lira fell by 4.2% to trade at 14.4741 against the greenback at 10:09am Istanbul time, marking a new intraday low. So far this year, the lira has lost 47% of its value.

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The country’s monetary regulator is expected to meet on Thursday to slash the key interest rate by 100 basis points to 14% despite soaring inflation of more than 21%, according to a Reuters poll revealed at the end of last week.

Since September, Turkey’s central bank has cut the key interest rate by 400 basis points. Over the past two years, the regulator has intervened three times to keep the lira afloat by selling dollars.

The upcoming rate cut would come in line with the latest demands voiced by the country’s President Recep Tayyip Erdogan for lower borrowing costs to boost growth.

The state monetary policy, along with significant lira depreciation, will further weigh on inflation that is expected to skyrocket up to 30% year-on-year in early 2022, according to S&P Global Ratings, which has downgraded its outlook on the nation’s sovereign credit rating to negative.

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