Economy 2 MIN READ

UPDATE 2-Turkish lira weakens against dollar for fifth day

May 11, 2022By Reuters

Adds Erdogan comment

The Turkish lira eased a further 0.85% against the dollar on Wednesday, weakening for a fifth session and bringing the currency back towards the lows it hit in late December after a series of unorthodox interest rate cuts.

The lira TRYTOM=D3 weakened as far as 15.38 in morning trade from a close of 15.2490 on Tuesday. It stood at 15.3405 at 1157 GMT.

A currency crisis late last year sent the lira to a record low of 18.4 on Dec. 20, triggering state measures to underpin the lira through a scheme to protect lira deposits against depreciation and major forex market interventions.

Following a 44% slide in 2021, the lira has dipped another 14% this year after a long period of stability was upset by concerns about economic fallout from the war in Ukraine, which sent Turkey’s already-hefty energy import bill soaring.

The Turkish central bank sold $3.296 billion in foreign currency in April to Turkey’s state economic enterprises, primarily energy importer Botas, reflecting the rising cost of energy imports. nI7N2W500F

The currency crisis last year was sparked by a series of rate cuts long sought by President Tayyip Erdogan, who supports the unorthodox view that higher interest rates cause inflation. The lira’s depreciation stoked inflation, which hit 70% in April.

Erdogan said on Wednesday that Turkey had been fighting against “attacks” through exchange rates and interest rates for a long time. He said Turks were facing a high cost of living, adding that economic problems were temporary.

(Reporting by Ezgi Erkoyun; Editing by Daren Butler and Bernadette Baum)

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