Turkish lira falls to record lows after start of Erdogan’s new presidential term

ANKARA, Turkey (AP) — The Turkish lira fell to a new record high on Wednesday, extending its slide against the U.S. dollar since President Recep Tayyip Erdogan began his third term.

The lira weakened by more than 6% on Wednesday to 23.15 against the dollar. The decline brought the currency’s loss since the appointment of Erdogan’s new government to 8%. The currency has weakened by around 20% since the start of the year.

Turkey’s currency has lost value since 2021 due to what economists say is Erdogan’s insistence on keeping borrowing costs low to boost growth despite soaring inflation. The policy runs counter to conventional economic approaches that call for higher interest rates to keep inflation in check.

Analysts say Erdogan’s government has supported the lira ahead of Turkey’s presidential and parliamentary elections last month, using foreign currency reserves to keep the exchange rate in check.

On Saturday, Erdogan reappointed Mehmet Simsek, an internationally renowned former banker, as Treasury and Finance Minister in his new cabinet. The appointment was seen as a sign that Erdogan’s new administration could pursue more conventional economic policies.

Simsek, a former Merrill Lynch banker who previously served as finance minister and deputy prime minister under Erdogan, returned to cabinet after a five-year hiatus from politics.

Inflation in Turkey peaked at 85% in October before falling back to 39.59% in May.

Leave a Comment