Express & Star

Turkish lira hits record lows at start of Erdogan’s new presidential term

The Turkish currency has weakened by around 20% since the start of the year.

Last updated
Recep Tayyip Erdogan

The Turkish lira has tumbled to a fresh record low, extending its slide against the US dollar since President Recep Tayyip Erdogan started his third term in office.

The lira weakened by more than 6% on Wednesday, hitting 23.15 against the dollar.

The decline took the currency’s loss since the appointment of Mr Erdogan’s new government to 8%.

The Turkish currency has weakened by around 20% since the start of the year.

The lira has declined in value since 2021 due to what economists say is Mr Erdogan’s insistence on keeping borrowing costs low to stimulate growth, despite skyrocketing inflation.

Erdogan supporter
The Turkish people and economy are being pummelled by sky-high inflation, and many are still recovering from a devastating earthquake in February made worse by the government’s slow response (AP)

The policy runs contrary to conventional economic approaches that call for higher interest rates to tame inflation.

Analysts say Mr Erdogan’s government propped up the lira in the run-up to Turkey’s presidential and parliamentary elections last month, using foreign currency reserves to keep the exchange rate under control.

On Saturday, Mr Erdogan reappointed Mehmet Simsek, an internationally respected former banker, as treasury and finance minister in his new cabinet.

The appointment was viewed as a sign that Mr Erdogan’s new administration might pursue more conventional economic policies.

Mr Simsek, a former Merrill Lynch banker who previously served as finance minister and deputy prime minister under Mr Erdogan, returned to the cabinet after a five-year break from politics.

Inflation in Turkey peaked to a staggering 85% in October before easing to 39.59% in May.

In a tweet posted on Monday shortly after he took the oath of office in parliament, Mr Simsek vowed to oversee Turkey’s finances with “transparency, consistency, accountability and predictability.”

“As we navigate through domestic and international challenges, we affirm our commitment to rules-based policymaking to enhance predictability,” he wrote.

“While there are no short cuts or quick fixes, rest assured that our experience, knowledge (and) dedication will help us overcome potential impediments ahead. Our immediate priority is to strengthen our team and design a credible programme.”

Sorry, we are not accepting comments on this article.