Turkish Lira Near Rock-bottom amid Low Rates, Rising Inflation

The Turkish lira fell by 0.8% against the dollar on Friday, as investor concerns about low interest rates and rising inflation pushed the lira towards a record low hit last week.

After it plunged to 13.9095, the lira stabilized at 13.8750 against the dollar.

The Turkish currency has lost 46% of its value against the greenback this year, hitting an all-time low of 14 ₺ to the dollar last week.

Turkey's new Finance and Treasury Minister Nureddin Nabati said on Thursday that the budget deficit would be less than 3.5% of gross domestic product (GDP) this year.

It is reported that Turkish President Recep Tayyip Erdogan renewed his commitment to lower interest rates, and again defended the monetary easing policy, saying that Turkey would reduce inflation and exchange rate fluctuations through low interest rates.

Inflation in Turkey jumped to its highest rate in three years, reaching 21.3% last month, making real interest rates sharply negative, a dangerous indicator for investors fleeing the Turkish market, while Turkish citizens rushed to acquire foreign currencies to protect their wealth.

Despite opposition calls for early elections, Erdogan has repeated in recent weeks that lower interest rates are needed to boost exports, credit, jobs and economic growth.