Turkish Lira Hits Record Low Value... Central Bank Intervention

[Image source=Yonhap News]

[Asia Economy Reporter Yuri Kim] As the value of the Turkish lira hit another all-time low, the Central Bank of Turkey intervened in the market.

According to the Associated Press on the 13th (local time), the value of the Turkish lira plunged to an intraday record low of 14.75 lira per US dollar. Considering that it was trading in the mid-7 lira range per dollar at the beginning of the year, the value has nearly halved.

The Central Bank of Turkey issued a statement saying, "We intervened in trading due to unhealthy price formation in the exchange rate." After the central bank's intervention, the lira's value rose to 14.13 lira per dollar, but this still represents a 1.8% decline compared to the previous trading day's closing price.

The decline in the lira's value was directly caused by the central bank's interest rate cuts. Generally, when a central bank lowers its benchmark interest rate, the value of the domestic currency falls against foreign currencies, the money supply increases, and inflation rises. Since September, the Central Bank of Turkey has cut the benchmark interest rate for three consecutive months, lowering it from 19% to 15%.

With the Monetary Policy Committee meeting scheduled for the 16th, where the central bank is expected to cut the benchmark interest rate again, the lira's value is expected to continue its downward trend for some time.

This content was produced with the assistance of AI translation services.