Turkish lira stabilizes – economy

The Turkish central bank’s interest rate decision last week strengthened the country’s currency. The lira increased in value and only ten lira had to be paid for one euro. The central bank kept its key rate at 19% – despite high inflation and contrary to Turkish President Erdoğan’s wishes. He also announced that he would maintain his tight monetary policy until inflation, which stood at 18.95% in July, eases. The independence of the central bank has recently been one of the main concerns of investors. Erdoğan is a declared opponent of interest rates and has already fired the last three central bank governors due to divergences in monetary policy. In mid-March, he surprisingly killed central bank chief Naci Ağbal and replaced him with Şahap Kavcıoğlu – opponent of restrictive monetary policy. This had dealt a blow to the already weak national currency.

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