(Ankara) Turkish President Recep Tayyip Erdogan once again affirmed his refusal to raise the level of key rates, despite the further collapse of the Turkish lira on Tuesday, during a television interview on the Turkish public channel.
“With the new economic model, we reject out of hand the policy of attracting hot capital with high interest rates. We will support production and exports with the lowering of rates, ”said the Turkish head of state.
The Turkish lira made another historic plunge on Tuesday, losing nearly 6% of its value in one day against the dollar and the euro, surpassing the 15 pounds for the European banknote, a level never before reached.
The Turkish lira was trading at 13.69 pounds to the dollar and 15.51 pounds to the euro on Tuesday at 4:05 p.m. EST.
The plunge in the pound also appears to have been affected on Tuesday night by fears that the US Federal Reserve would tighten monetary policy sooner than expected.
News of the replacement of the head of the Central Bank’s markets department, reported by local media, has also, according to experts, helped accelerate this trend.
Already falling before the president’s interview, the Turkish lira continued to lose value during his speech.
The Turkish currency had unscrewed last week, losing 13% of its value in a few hours against the dollar, a fall in part caused by a series of key rate cuts decided by the Turkish president.
Contrary to classic economic theories, President Erdogan believes that high rates promote inflation.
In accordance with the president’s wish, the Turkish Central Bank – officially independent – thus lowered its key rate again in November (from 16 to 15%) for the third time in less than two months, while inflation was close to 20%. over one year, i.e. a rate four times higher than the government’s initial target.
The inflation rate for November, which will be announced on Friday, could be above 20%, some experts say.
The pound has lost over 40% of its value against the dollar since the start of the year.