However, despite the gains made by the exchange rate of the Turkish lira against the dollar on Monday’s trading, the Turkish currency is still losing about 40% of its value against the dollar so far this year.
Turkey’s inflation rate reached an annual rate of 21% last November, and economists believe it could rise at a rate of up to 30% over the next six to nine months, while the Turkish Central Bank cut interest rates for the fourth consecutive month last week, usually Central banks raise interest rates when inflation rises to prevent the economy from overheating.
Turkish President Recep Tayyip Erdogan’s tendency to meddle in monetary policy, firing central bank governors and finance ministers who disagree with his bets on lowering interest rates, has undermined the lira. At the same time, he portrays Turkey’s economic problems as a result of foreign interference and the struggle for more financial independence for the country.
Erdogan had said in recent statements: “What do they say? They say I lower interest rates. They should not expect anything else from me. As a Muslim, whatever Islamic teachings is what I will do. This is what I will continue to do. The religious order is clear.”
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