The Turkish Lira’s fall continued towards the end of October after the Turkish Central Bank lowered its key interest rate.
The one-week repo rate – which measures the rate at which central banks lend money to commercial banks – is now at 16%, down 200 basis points. The rate cut was forecast at 100 basis points.
The hammering on the Lira still goes on with a worsened inflation outlook. The currency has lost more than 10% in October after a string of government and central bank decisions.
In March, President Recep Tayyip Erdogan unseated the governor of the Turkish Central Bank, and that’s when the Lira’s dive began. Before that, the currency was the best performer among most emerging markets.
The ousting continued in October as the President sent off three policymakers against his call to further lower borrowing costs.
In the last week of October, the Lira got closer to 10 Liras for a U.S. Dollar when the Turkish President ordered the removal of the ambassadors of 10 Western countries, including the United States.
Commerzbank AG is now the currency’s doomsayer after changing its forecast to 11 Liras per Dollar by the end of 2022.