Turkish lira hits new depths near 10 to the dollar
The Turkish lira continued its dive into uncharted territory on Thursday, touching a new low of 9.975 to the dollar after a jump in U.S. inflation exacerbated worries over a currency already hobbled by the central bank’s unorthodox rate cuts, Reuters reported.
The lira was down as much as 1.2% and near the psychological threshold of 10 versus the U.S. currency. It has shed two-thirds of its value in five years, eating into the incomes of Turks along with double-digit inflation.
At 11:56 GMT, one dollar was worth 9.9145 Turkish lira. The Turkish currency - the worst performer in emerging markets again this year - was also nearing a record intraday low versus the euro at 11.4386.
The lira has lost 25% of its value this year mainly due to concerns over monetary policy credibility as President Tayyip Erdogan pushed for lower interest rates to boost growth despite inflation running near 20%.
Since September, the central bank has cut its policy rate by a total of 300 basis points to 16%, arguing that the inflationary pressures are temporary. Analysts expect more easing despite the already deeply negative real rate.