The Magazine for Asian Investors
The Turkish lira plunged after the Turkish central bank surprised the market by cutting interest rates, even though inflation had risen to almost 80%.
The lira fell 0.83% to 18.083 against the dollar.
Turkey’s central bank cut the key interest rate by 1% to 13%, after it had been at 14% for seven months.
This is the first interest rate cut by the Turkish central bank since last year.
Turkey’s central bank issued a statement saying the rate cut was aimed at boosting economic growth and employment in the country amid geopolitical risks.
In addition, the Central Bank of Turkey stated that rising interest rates have affected the efficiency of monetary policy.
The Turkish central bank’s interest rate cuts triggered the lira crisis, as the currency fell 44% last year after foreign investors, who doubted the central bank’s independence, dumped their holdings.