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The Turkish lira collapses to a historical level after a decision by the Central


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 2021-10-21 07:35
 

Shafaq News/ The Turkish currency fell against the dollar today, Thursday, to historical levels after the Turkish Central Bank decided to reduce the main interest rate, which is a basic demand of Turkish President Recep Tayyip Erdogan.

 

According to the "Bloomberg" agency, the dollar exchange rate rose to 9.4206 lira, an increase of 2.19%, and this is the first time that the Turkish currency recorded this level.

 

The lira lost 20% of its value this year, and half of this decline came since the beginning of last month, when the central bank began giving easing signals, despite the rise in inflation to about 20%.

 

On the 15th of this month, President Recep Tayyip Erdogan dismissed three policy makers at the Central Bank, deepening the lira's decline.

 

The Russian "Novosti" agency reported, earlier today, Thursday, that the Turkish Central Bank reduced the main interest rate from 18% to 16% annually.

President Recep Tayyip Erdogan has repeatedly called on the central bank to ease monetary policy, and analysts believe that his intervention has eroded the credibility of monetary policy in the past few years.

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The Turkish lira recorded a historic decline against the major currencies

Economie11:38 - 22/10/2021

 
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Follow-up – Mawazine News:
The Turkish lira recorded, on Friday morning, a historical decline against foreign currencies, and it exceeded the 9.60 limit against one US dollar.
The exchange rates of the dollar, the euro and the pound sterling against the Turkish lira in today’s trading were as follows:
                            Selling Buying
Dollars 9.6248 9.6083
Euro 11.1967 11.1904
Sterling Pounds 13.2642 13.2506 
The Turkish lira continues to decline after the Turkish Central Bank announced, yesterday, Thursday, the interest rate cut to 16 percent by an amount of 200 basis points, as the Turkish lira fell following the Monetary Policy Board's statement to 9.47 against the dollar and 11 lira against the euro. Ended 29/A 4

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The headquarters of the Central Bank of Turkey
The headquarters of the Central Bank of Turkey

Informed sources said that Turkey's state banks are expected to cut the interest rate on loans by about 200 basis points on Monday, following the announcement of an unexpectedly large rate cut by the central bank last week.

The three banking sources told Reuters that three of the major state banks, Halkbank , Waqf Bank and Ziraat Bank, are expected to cut interest on corporate and individual loans, mortgages and other loans.

On Friday, one bank sent an email to its employees informing them of the bank's intention to reduce the cost of borrowing by 200 basis points. Another banking source said that government banks will cut interest rates on Monday "by a large percentage comparable to the 200 basis points that the central bank has cut from the repo rate."

The cultivation of the bank that he had no comment and declined to comment create a bank did not want the bank to stop immediately on a request for comment.

The Turkish state wealth fund also did not immediately respond, and the fund fully owns Ziraat Bank, a 75 percent stake in Halkbank and a 36 percent stake in Waqf Bank.

The central bank declined to comment on the state banks' plans.

The lira had already reached record low levels last week after the central bank announced a cut in the interest rate by 200 basis points, despite the increase in inflation, which constituted a shocking move that economists and opposition representatives described as reckless.

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  • 4 weeks later...
  •  Time: 11/20/2021 00:11:56
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  •  Reading: 2,093 times
For the eighth day, the Turkish lira hits a record low
  
{Economic: Al Furat News} The Turkish lira gave up its gains at the beginning of Friday's trading, and fell by about two percent, hitting a new record low.

The Turkish lira slumped a day after falling nearly 6 percent when the central bank, under pressure from President Recep Tayyip Erdogan, cut interest rates again and signaled more monetary easing was on the way even as inflation risks rose.

It initially rose to 10.83 pounds against the dollar, before falling back to 11.32, to fall to its lowest level ever for the eighth consecutive session.

And at 16.32 GMT, it was trading at 11.2, which increases the risks to the economy and the political future of Erdogan.

The Turkish currency, the worst performer among emerging market currencies, tumbled more than 12 percent this week alone, affected by the central bank's decision to cut its interest rate by 100 basis points to 15 percent, despite inflation rising near 20 percent.

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So how is it that when the interest rate of the US is lowered to near zero the USD is stronger, that when in Europe the rate is negative the Euro stays globally strong, but then when Turkey reduces their interest rate the TL becomes weaker? 
 

Looks to me like the systemic distribution of wealth the USD leverages as the world reserve currency has moved from the devaluation of South American currencies across the Atlantic Ocean landing in both Asia and Europe at once through Turkey. 
 

Even a child understands if there’s one full plate of cookies on the table that for one kid to get a mostly full plate of cookies the other kid gets less.

 

BTC is going to transition to the world reserve currency. This will remove the elements of human nature while managing of human nature; the solution to removing corruption from established architectural systems.

 

Anyways, back to the original question. Why the inverse relationship with respect to interest rates and currency value for Turkey? How does this work? Why is this presentation of market divergence in existence?

 

I’m very intrigued.

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