Monday, 11 December 2023

Turkish lira traded slightly lower after falling overnight


Turkish lira witnessed a slight decline early this morning, Thursday, after a sharp decline during the night, to a record level of 22.95 against the dollar during the hours of lack of liquidity, at a time when the markets are awaiting President Recep Tayyip Erdogan’s announcement of the formation of the new government.

According to “Reuters”, the lira reduced some of the losses it suffered during the night, and recorded 20.7550 by 0416 GMT. The lira briefly touched the level of 22.95, which increased the percentage of losses it incurred this year to more than 18 percent, after it declined before and during the parliamentary and presidential elections in May.

Markets are now shifting their focus to Erdoğan’s announcement of the formation of the new government. Four senior officials predicted that Erdogan might include former Economy Minister Mehmet Simsek to his new government, whether in the position of finance minister or vice president. Şimşek is highly regarded in the financial markets due to its traditional economic policies

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Giving him a major role now may indicate a departure from the unconventional policies that Erdogan has pursued over the years, which are based on lowering interest rates despite the high inflation, which led to the continued decline of the lira.

The currency lost 30 percent in 2022 and 44 percent in 2021, which is largely due to Erdogan’s unconventional policies. The lira has lost more than 90 percent of its value over the past decade, during bouts of economic prosperity and depression, and in light of unbridled inflation.