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The Turkish lira’s exchange rate against the U.S. dollar fell to a new low on Friday, with a drop of 3% this month due to growing concerns that President Recep Tayyip Erdogan’s policies have driven foreign countries investor.
Erdogan Fired three senior central bank officialsSince March, including the governor, there has been growing concern that policymakers will not be able to resist political pressure to reduce borrowing costs at the expense of controlling double-digit inflation in the country.
The exchange rate of the lira against the US dollar was as low as 8.6145 on Friday, which has fallen more than 13% since the beginning of the year. It marks the lowest level that the currency has reached within a few hours of active trading in the lira.
“Things look very pessimistic, and the macroeconomic and political situation has turned negative,” said Enver Erkan, an economist at Tera Securities in Istanbul. “The central bank cannot actively set the tone, and Turkey’s special dynamics are at odds with other emerging market currencies.”
As a sign of the deterioration of investor prospects, the California State Senate voted this week to require the public employee pension system and the public employee retirement system, the two largest pension investors in the world, to allow school districts and cities Choose youInvestment vehicles owned or issued by Turkey.
The divestment pressure aims to punish the government for refusing to admit the killing and expelling as many as 1.5 million Armenians at the end of the Ottoman Empire were genocide, California Senator Anthony Botantino said that he is one of the co-sponsors of the bill. Turkey claims that both Muslims and Christians died in the chaos of the First World War and the subsequent collapse of the Ottoman Empire.
Standard & Poor’s Global Ratings will announce its latest rating decision on Turkey later on Friday. Since August 2018, it has maintained the country’s rating below investment grade B+. The three major rating agencies, Standard & Poor’s, Fitch and Moody’s, classify Turkish debt as junk.
“That was the peak of the last balance of payments crisis, [and] It’s hard not to argue that the situation has deteriorated since then,” said Timothy Ash, chief strategist at BlueBay Asset Management, referring to Standard & Poor’s last rating action.
Erdogan, who has a history of intervening in the central bank, abruptly fired the governor of the central bank in March after he sharply raised interest rates to cool the current inflation of more than 17%.This The President appointed newspaper columnist Sahap Kavcioglu He shares his unorthodox belief that high interest rates will lead to inflation and steer the bank.
This week, Erdogan succeeded Dismissal of the first deputy governor of the central bank Soon after Kavcioglu took office. According to Bloomberg News, the central bank also changed several directors on Thursday, including the heads of banks, research and statistics departments.
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