The Turkish lira fell more than 7% on Wednesday and hit new lows against the dollar and the euro, ten days after the re-election of President Recep Tayyip Erdoğan.
The Turkish currency, heavily backed by the Turkish Central Bank ahead of the presidential and legislative elections in May, traded shortly after 8 a.m. around one US dollar for 23.15 Turkish liras, or -7%.
It lost even more ground against the euro (-7.7%), after crossing the symbolic bar of 25 pounds for one euro. This is the pound’s biggest one-day drop since the tumble in late 2021.
The currency was trading at less than 20 pounds to the dollar and less than 21.50 pounds to the euro before the second round of the presidential election on May 28.
Turkey’s new finance minister, Mehmet Simsek, a well-known and respected market expert appointed on Saturday night, acknowledged late in the day that there was “no quick fix” to fix the currency.
In a message on Twitter, he reaffirms his commitment to “respect the rules”: “Our immediate priority is to strengthen our team and design a credible program”, he assures.
Turkey’s central bank spent nearly $30 billion to support the national currency between 1er January and the presidential election, sending its foreign exchange reserves into negative territory for the first time since 2002.
Turkish President Recep Tayyip Erdoğan, who has conducted a heterodox monetary policy in recent years, called on Mr. Simsek to stem inflation (39.6% over one year in May) and put the Turkish economy back on track. tracks.
When taking office on Sunday, the minister warned that it would be necessary to return to “rational measures” to restore the economy.
“Coma”
“I think we are seeing the impact of Simsek pushing the Turkish central bank towards rational policy — which means a weaker, more competitive currency,” Timothy Ash, an emerging markets analyst at BlueBay, said on Wednesday. “we are witnessing a normalization” of Turkish monetary policy.
For Ipek Ozkardeskaya, an analyst at Swissquote Bank, the Turkish lira is coming out of a “coma” and “will go from one record to another again”.
“No one knows what the government [turc] really wants to do, but we know that there is, after the elections, an effort to get out of an absurd monetary policy and return to more orthodox choices, ”she says.
“It was inevitable,” economist Güldem Atabay told AFP.
For her, this fall in the pound should last until the decision of the central bank on interest rates on June 22. “How will interest rates rise?” If it’s 25 basis points […], it won’t change anything. Will they go from 8.5% to 20%? We will see,” adds Mr. Atabay.
Analysts believe that a sharp rise in the key rate, currently stable at 8.5% since the end of February, could help revive the Turkish economy.
President Erdoğan forced the Turkish Central Bank to steadily lower interest rates, contributing to soaring inflation.
Contrary to classic economic theories, the Turkish head of state believes that high interest rates promote inflation.
Mr. Erdoğan has repeatedly invoked the precepts of Islam, which prohibits usury and claims that high interest rates are promoted by a foreign “lobby”.