The Turkish lira fell to a record low after the start of Erdogan’s new presidential term

The Turkish lira fell to new record lows, sliding further against the US dollar

Economy of Turkey

A vendor covers his eyes against sunlight as he waits for customers at a street market in Eminonu commercial district, Istanbul, Wednesday, June 7, 2023. The Turkish lira fell to a new record low on Wednesday, extending its slide. dollars since President Recep Tayyip Erdogan won a third presidential term in last month’s election. (AP Photo/Francisco Seco)

The Associated Press

ANKARA, Turkey — The Turkish lira fell to a new record low on Wednesday, sliding further against the US dollar since the start of President Recep Tayyip Erdogan’s third term in office.

The lira weakened by around 7% on Wednesday, hitting 23.18 against the dollar. The decline extended the currency’s loss to more than 8% since the appointment of Erdogan’s new government. The currency has weakened by around 20% since the beginning of the year.

The lira also weakened by more than 7% against the euro on Wednesday.

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The value of the Turkish currency has fallen since 2021 as economists say Erdogan insists on keeping borrowing costs low to spur growth despite skyrocketing inflation. This policy runs counter to traditional economic approaches that call for higher interest rates to curb inflation.

Analysts say Erdogan’s government propped up the lira ahead of Turkey’s presidential and parliamentary elections last month, using foreign exchange reserves to keep the exchange rate under control. The weakening of the lira suggests that the government is loosening its control over the currency.

On Saturday, Erdogan named Mehmet Simsek, an internationally renowned former banker, as the finance minister and finance minister of his new cabinet. The appointment was seen as a sign that Erdogan’s new administration could pursue a more conventional economic policy.

Simsek, a former Merrill Lynch banker who previously served as finance minister and deputy prime minister under Erdogan, returned to the cabinet after a five-year hiatus from politics. At a ceremony at his ministry on Sunday, Simsek said Turkey had no choice but to return to a “rational basis”.

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Inflation in Turkey reached a peak of 85% in October, then decreased to 39.59% in May.