Turkish Business Groups Sound Alarm Bells Over Currency Rout
(Bloomberg) -- Some of Turkey’s leading business groups questioned the country’s monetary policy as the lira plunged to new lows against the dollar on Friday, a day after the central bank further lowered borrowing costs.
“We’re bewildered to watch the central bank, which cut rates yesterday, giving its precious FX resources to the market today,” Erdal Bahcivan, head of the Istanbul Chamber of Industry, said in comments on Twitter.
The currency has slumped as the central bank unleashed a string of interest-rate cuts since September, under intense pressure from President Recep Tayyip Erdogan to fall in line with his unorthodox monetary policy.
The president, whose support dropped as the pandemic cut growth and jobs, says higher rates fuel prices rather than curb them and has vowed to turn Turkey into a high-investment economy through lower borrowing costs.
Rifat Hisarciklioglu, head of the Union of Chambers and Commodity Exchanges, or TOBB, said the exchange-rate fluctuations were hurting many businesses.
“Turmoil in markets and the level of exchange rates is worrying many companies and having a negative impact on them,” Hisarciklioglu said on Twitter. He urged the government to introduce “emergency measures” to stabilize markets, without specifying what kind of steps were needed.
The lira’s plunge past 17 per dollar on Friday prompted the central bank to intervene in foreign currency markets for the fifth time this month, citing “unhealthy price formations in exchange rates.” The lira was trading at 16.8533 per dollar at 3:56 p.m. in Istanbul.
The central bank on Thursday said it was wrapping up its cycle of interest-rate cuts after delivering a fourth straight reduction that cut its one-week repo rate to 14%.
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