Turkish lira banknotes are seen placed on U.S. Dollar banknotes in this illustration taken, November 28, 2021. REUTERS/Dado Ruvic/Illustration
The Turkish lira held steady on Wednesday after tumbling to a new record low of 14 to the dollar overnight as President Tayyip Erdogan doubled down on his pre-election strategy of sharp rate cuts despite soaring inflation and widespread criticism.
The lira stood at 13.4195 against the U.S. currency at 0624 GMT, flat compared with the close on Tuesday when it slumped 8.6%. The greenback also benefited from hawkish U.S. Federal Reserve comments.
The currency has lost as much as 47% of its value this year, down some 30% in November alone, rapidly eroding Turks’ earnings and savings, upending household budgets and even leaving them scrambling to find some imported medicines.
Erdogan, for the fifth time in less than two weeks, defended the monetary easing that most economists have called reckless in an interview with state broadcaster TRT on Tuesday evening, saying there was “no turning back” from the new policy direction.
“We will see that the interest rates will fall markedly and hence there will be an improvement in exchange rates before the elections,” he said.
Polls are set for no later than mid-2023.