The Turkish President drops the lira with his own hand

Over the past few weeks, the Turkish lira has become the weakest currency in the world. If at the beginning of autumn the rate of the USD/TRY pair was located near 8.3 per dollar, then today the lira has weakened to the level of 13.47. Over the year, the currency has fallen in price by more than 45% and this is the maximum drop in the last 20 years. 

Analysts identify several factors of the decline in the Turkish currency. The main reason is the wrong economic policy of President Tayyip Erdogan. The head of the country is confident that a rate cut during periods of inflation is the only correct monetary policy, since a rate cut provokes economic growth. 

However, in practice, in conditions of high inflation, this only leads to a further weakening of the lira and Turkish bonds. At the same time, the role of the Central Bank of Turkey in the current situation is very small, since the president of the country exerts enormous pressure on this institution.

On November 18, the Central Bank of Turkey once again lowered the discount rate, this time from 16% to 15%. At the same time, annual inflation in the country today exceeds 20%, and the unemployment rate, only according to official data, reaches 14-15%. Economists predict that in December the Central Bank will cut the rate again, which may lead to another steep peak of the Turkish lira.