x

Economy

Turkish Lira Dips to New Low After Another Interest Rate Cut

December 16, 2021

ANKARA — Turkey’s Central Bank again cut a key interest rate Thursday despite soaring consumer prices that are making it difficult for people to buy food and other basic goods, sending the country’s currency to record lows against the U.S. dollar.

The bank’s monetary policy committee said it is cutting the rate from 15% to 14%, though inflation is running at 21%, according to official data.

It is in line with the policies of President President Recep Tayyip Erdogan, who has been pressing for low borrowing costs to boost growth, exports and investments ahead of elections in a year and a half.

The Central Bank has now slashed rates by 5 percentage points since September, running against conventional economic policy of raising interest rates to ease high inflation. Erdogan contends that high interest rates cause inflation and has declared himself an “enemy” of high borrowing costs.

The Turkish lira hit a historic low of 15.28 against the U.S. dollar early Thursday amid the prospect of a new rate cut and then extended its losses following the decision. The lira was trading later Thursday at 15.62 against the dollar, 5% weaker from Wednesday’s close.

The Turkish currency has lost about half of its value since the start of the year.

The bank has intervened four times in recent weeks by selling off foreign currency in a bid to prop up the lira, but the action has failed to stop its depreciation.

Soaring consumer prices and the falling value of the lira have left many people struggling to make ends meet. Long lines have been forming outside of municipality-run kiosks selling bread at discounted prices.

In a bid to alleviate the hardship, Erdogan announced Thursday that the government was increasing the monthly minimum wage by 50%, from 2,825 lira ($182) to 4,250 lira ($274 ), and would no longer tax the earnings.

“With this increase, I believe that we have demonstrated our determination not to allow our employees to be crushed by the price increases,” Erdogan said after his announcement.

“We are determined to put an end to the uncertainty that has arisen due to the recent fluctuations in the exchange rate and the exorbitant prices increases,” he added.

Turkey’s main opposition party leader, Kemal Kilicdaroglu, said his party could not “belittle” the new minimum wage but expressed concerns that inflation would soon erode the increase.

“It (the government) can control inflation and the price rises, at least our brothers who earn a minimum wage will be able to breathe,” he said.

Opposition party leaders have accused Erdogan of severe mismanagement of the economy and have called for early general elections. Erdogan insists that elections will be held in 2023 as scheduled.

RELATED

ATHENS - While denying reports that refugees and migrants were being pushed back on land and sea, Greece's New Democracy government is trying to keep them out, the Coast Guard saying it repelled 1,130 crossing on boats from Turkey.

Top Stories

General News

FALMOUTH, MA – The police in Falmouth have identified the victim in an accident involving a car plunging into the ocean on February 20, NBC10 Boston reported.

General News

NEW YORK – Meropi Kyriacou, the new Principal of The Cathedral School in Manhattan, was honored as The National Herald’s Educator of the Year.

General News

PHILADELPHIA – The Federation of Hellenic Societies of Philadelphia and Greater Delaware Valley announced that the Evzones, the Presidential Guard of Greece will be participating in the Philadelphia Greek Independence Day Parade on March 20.

Video

Mission…to Alonnisos, a TNH Documentary

O oceanic you sing and sail White on your body and yellow on your chimeneas For you're tired of the filthy waters of the harbors You who loved the distant Sporades You who lifted the tallest flags You who sail clear through the most dangerous caves Hail to you who let yourself be charmed by the sirens Hail to you for never having been afraid of the Symplegades (Andreas Empeirikos)   What traveler has not been fascinated by the Greek islands, drawn by the Sirens’ song of a traveler’s dreams? TNH and our video show ‘Mission’ marked the change of the season by transporting viewers into the heart of summer.

Enter your email address to subscribe

Provide your email address to subscribe. For e.g. abc@xyz.com

You may unsubscribe at any time using the link in our newsletter.