The Turkish lira marks a new low after losing almost 30% in a month

The Turkish lira this Friday marked a new all-time low, trading at 13.9 units per dollar and 15.7 per euro, which is why it has lost 29% since last November 10.

The value of the currency did not change substantially when the Central Bank announced a new “direct intervention” around noon, the third since the beginning of the month, to stabilize the “unhealthy” exchange rate of the lira.

Although at first the lira gained more than 1%, it soon lost again to continue oscillating near the same values ​​before the intervention.

The previous direct interventions by the Central Bank, announced on December 1 and 3, also did not have lasting effects on the value of the Turkish currency.

As explained by the economist Mustafa Sönmez, by intervening the Central Bank “is not selling its reserves but is selling futures, that is, it guarantees the lira buyer a definite change at a later date, assuming possible losses”, although he predicted little interest of financial markets.

The last major drop in the lira occurred at the end of November and led to the resignation of Finance Minister Lütfi Elvan and his replacement by Nureddin Nebati, considered close to Turkish President Recep Tayyip Erdogan and a follower of his policy of reducing taxes. interest rates to stimulate the economy.

This approach, economists believe, triggers inflation and devalues ​​the currency, which has already lost 45% so far this year.

In the last days Erdogan It has insisted several times that the Central Bank should keep rates low, currently at 15%, well below year-on-year inflation, which stands at 21.3%.

The Turkish president blames “speculators” for the price increases for allegedly stockpiling products in anticipation of further increases.

The opposition, for its part, considers that real inflation is at least double the official figure and points out that the price index for producers stands at 54.6%, according to data from the Turkish Statistical Institute (TÜIK).

The devaluation of the lira is triggering Turkish exports, more competitive than before in the international market, and Erdogan expects from this effect an increase in employment and the elimination of the balance of payments deficit.

However, the fall in the lira also makes it more expensive to import vital raw materials for Turkish industry and reduces the profit margin of companies.

The devaluation of wages also leads to a general impoverishment not only of the labor sectors, but also of the middle class of the Eurasian country, of 80 million inhabitants.