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Source: Istanbul – Reuters
The Turkish currency continued to decline on Tuesday, hitting the euro’s 9-pound barrier for the first time, as investors waited to see if the central bank could violate expectations and raise interest rates at its meeting this week to curb growth. decline of the local currency.
The pound fell in 14 of the past 16 days and hit a new all-time low of 7.67 against the dollar during trading, after closing Monday at 7.6365.
The lira has fallen more than 22% against the US currency since the beginning of the year, to rank among the worst performing currencies in the world.
It also fell to a new all-time low against the European currency at £ 9 per euro, extending its losses this year to around 26%.
Analysts, including analysts at Goldman Sachs, say that the Turkish central bank is likely to decide at its meeting scheduled for Thursday to raise the interest rate for the so-called lagged liquidity window, which currently stands at 11.25%, which is one of the highest interest rates you set.
That can protect the pound from a further sharp drop. The coin has plunged about 22% against its US counterpart since the beginning of this year and has lost about half its value since the end of 2017.
But analysts say the move will only be a delay in an official rate hike, which has stood at 8.25% since May.
Although most economists polled by Reuters do not expect an official rate hike this week, they believe the central bank will continue to take steps to raise the weighted average cost of financing, which reached 10.4%, from 7.3%. , in two months.
The credit rating agency said Turkey’s external vulnerabilities will likely result in a balance of payments crisis and that financial safety margins are eroding.
“The possibility of a financial shock remains the main danger facing the Turkish economy,” said Ihsan Khoman, Research Director Middle East and North Africa at MUFG Bank.
But President Recep Tayyip Erdogan, a constant critic of credit rating agencies, launched a new attack on these institutions in the weekend after Moody’s decision was announced, referring in his comments to Standard & Poor’s.
“You cannot impose conditions on Turkey under the sword of sanctions. You did this before. Did you get a result? No, it did not happen. It will not happen in the future,” he said in the speech.
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