Investing.com – After the Turkish central bank decided to cut interest rates against most central banks around the world, the Turkish lira, which rose to 18.38 in the first half of the day, is witnessing new record highs at 18.4185, which portends a further decline in the lira’s strength against dollar.
The central banks of Switzerland and England raised interest rates by 75 basis points, bringing the interest rate to a 14-year high.
The volatility caused by rising interest rates in world markets causes the currencies of developing countries to depreciate. Which reflected negatively, especially in light of the Turkish Central Bank’s continued reduction of interest rates.
The Turkish Central Bank is moving in the opposite direction
Turkey’s central bank cut interest rates by 100 basis points this month after cutting them last month. With the rise in the difference between inflation and the interest rate to a record level, which accelerated the decline of the lira towards record levels.
A few moments ago, the Turkish Central Bank announced a cut in interest rates to 12% by cutting 100 basis points, in a new surprise from the Turkish Central Bank, especially after the US Federal Reserve raised interest rates by 75 basis points, to jump to 3.25%, the highest level since the 2008 crisis.
Turkey also cut its overnight borrowing rate to 10.5% from 11.5%. It also dropped the Turkish lending rate overnight to 13.5% from 14.5%.
Economists expect a continuation of high inflation above 80% and a further drop in the lira, which has already fallen 27% against the dollar since the beginning of the year, and 53% in the past year.
Turkish President Erdogan remains optimistic, and expects inflation to fall by the end of the year. Inflation is not an insurmountable economic threat. The president said during an interview on Tuesday.
It fell during these moments of trading, today, Thursday, at its lowest level ever, to record levels of 18.4185 lira to the dollar, a few hours after the Turkish Central Bank’s decision on interest.
The Turkish lira recorded its lowest level ever on December 20, 2021, when it fell at levels of 18.36 lira dollars, and this coincided with the country exceeding its highest level in 20 years at 36%.