Turkish lira continues to weaken against foreign currencies
Turkey's local currency further slipped against the dollar and euro on Tuesday amid doubts whether the country's newly appointed finance minister Mehmet Simsek will be able to shift monetary policy away from President Tayyip Erdogan's unorthodox strategy of cutting interest rates in the face of high inflation.
The dollar hit a record high of 21.50 TL, from 21.25 TL a day earlier, appreciating almost 10% against TL in the three weeks following the first round of the presidential election on 14 May, when Erdogan emerged as the leading candidate. Euro has appreciated almost 7% against TL in the same period of time.
Commenting on possible policy changes after appointment of Simsek, Diana Iovanel, Markets Economist at Capital Economics, told Reuters:
"We don't know yet if there will be just a name on paper or if they will actually change policies a bit towards more orthodoxy,"
According to JPMorgan economists, a policy interest rate hike to 25% from the current 8.5% is on the cards for Turkey's Monetary Policy Committee's upcoming meeting on June 22, "if not earlier," Reuters said.