Turkish lira dips to new low after another interest rate cut

Dec 16, 2021, 4:50 AM | Updated: 10:30 am

ANKARA, Turkey (AP) — Turkey’s Central Bank again cut a key interest rate Thursday despite soaring consumer prices that are making it difficult for people to buy food and other basic goods, sending the country’s currency to record lows against the U.S. dollar.

The bank’s monetary policy committee said it is cutting the rate from 15% to 14%, though inflation is running at 21%, according to official data.

It is in line with the policies of President President Recep Tayyip Erdogan, who has been pressing for low borrowing costs to boost growth, exports and investments ahead of elections in a year and a half.

The Central Bank has now slashed rates by 5 percentage points since September, running against conventional economic policy of raising interest rates to ease high inflation. Erdogan contends that high interest rates cause inflation and has declared himself an “enemy” of high borrowing costs.

The Turkish lira hit a historic low of 15.28 against the U.S. dollar early Thursday amid the prospect of a new rate cut and then extended its losses following the decision. The lira was trading later Thursday at 15.62 against the dollar, 5% weaker from Wednesday’s close.

The Turkish currency has lost about half of its value since the start of the year.

The bank has intervened four times in recent weeks by selling off foreign currency in a bid to prop up the lira, but the action has failed to stop its depreciation.

Soaring consumer prices and the falling value of the lira have left many people struggling to make ends meet. Long lines have been forming outside of municipality-run kiosks selling bread at discounted prices.

In a bid to alleviate the hardship, Erdogan announced Thursday that the government was increasing the monthly minimum wage by 50%, from 2,825 lira ($182) to 4,250 lira ($274 ), and would no longer tax the earnings.

“With this increase, I believe that we have demonstrated our determination not to allow our employees to be crushed by the price increases,” Erdogan said after his announcement.

“We are determined to put an end to the uncertainty that has arisen due to the recent fluctuations in the exchange rate and the exorbitant prices increases,” he added.

Turkey’s main opposition party leader, Kemal Kilicdaroglu, said his party could not “belittle” the new minimum wage but expressed concerns that inflation would soon erode the increase.

“It (the government) can control inflation and the price rises, at least our brothers who earn a minimum wage will be able to breathe,” he said.

Opposition party leaders have accused Erdogan of severe mismanagement of the economy and have called for early general elections. Erdogan insists that elections will be held in 2023 as scheduled.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Associated Press

MN school district policy bans teaching “divisive concepts”

BECKER, Minn. (AP) — A central Minnesota school district is clashing with the teachers union and LGBTQ allies over a proposed policy that opponents say would undermine equity and inclusion. The proposal by three Becker school board members prohibits “political indoctrination or the teaching of inherently divisive concepts,” in the district’s schools. Policy opponents say […]
10 hours ago
FILE- In this image taken from police body camera video provided by The Moab Police Department, Gab...
Associated Press

Gabby Petito’s family files claim alleging police failed her

SALT LAKE CITY (AP) — Gabby Petito’s family on Monday notified Utah officials of plans to file a wrongful death lawsuit alleging that police failed to recognize their daughter was in a life-threatening situation last year when officers investigated a fight between her and her boyfriend. The fight happened weeks before authorities say the boyfriend […]
10 hours ago
FILE - A man walks past a house abandoned after it was inundated by water due to the rising sea lev...
Associated Press

Study connects climate hazards to 58% of infectious diseases

Climate hazards such as flooding, heat waves and drought have worsened more than half of the hundreds of known infectious diseases in people, including malaria, hantavirus, cholera and anthrax, a study says. Researchers looked through the medical literature of established cases of illnesses and found that 218 out of the known 375 human infectious diseases, […]
10 hours ago
This image released by Minotaur shows "Do No Harm" by Robert Pobi. (Minotaur via AP)...
Associated Press

Review: A hero struggles with a mystery readers can solve

“Do No Harm” by Robert Pobi (Minotaur) Lucas Page retired from the FBI more than a decade ago after losing an eye, an arm, and a leg in an explosion. But Lucas is a man of unique talents, so once again — in “Do No Harm,” the third book in Robert Pobi’s series — the […]
10 hours ago
FILE - Nicki Minaj appears at the MTV Video Music Awards in New York on Aug. 20, 2018. Minaj will r...
Associated Press

Nicki Minaj to get Video Vanguard Award at MTV Awards

NEW YORK (AP) — Nicki Minaj will receive the Video Vanguard Award at the MTV Awards later this month, joining such previous winning music luminaries as Madonna, Janet Jackson, LL Cool J, Jennifer Lopez and Missy Elliott. Minaj, who has won five MTV trophies for such hits as “Anaconda,” “Chun-Li” and “Hot Girl Summer,” will […]
10 hours ago
A helicopter carrying water flies over the Matanzas Supertanker Base, as firefighters try to quell ...
Associated Press

Fire at Cuba oil facility spreads as 3rd tank ignites

HAVANA (AP) — A deadly fire that began at a large oil storage facility in western Cuba spread Monday after flames enveloped a third tank that firefighters had tried to cool as they struggle to fight the massive blaze. At least one person has died and 125 are injured, with dozens of firefighters reported missing […]
10 hours ago

Sponsored Articles

(Courtesy Condor)...
Condor Airlines

Condor Airlines shows passion for destinations from Sky Harbor with new-look aircraft

Condor Airlines brings passion to each flight and connects people to their dream destinations throughout the world.

Best retirement savings rates hit 4.30%

Maximize your retirement savings with guaranteed fixed rates up to 4.30%. Did you know there is a financial product that can give you great interest rates as you build your retirement savings and provide you with a paycheck for life once you retire? It might sound too good to be true but it is not; this product is called an annuity.
Day & Night Air Conditioning, Heating and Plumbing

Tips to lower your energy bill in the Arizona heat

Does your summer electric bill make you groan? Are you looking for effective ways to reduce your bill?
Turkish lira dips to new low after another interest rate cut