North Cyprus News | Where Now For The Turkish Lira?

North Cyprus News | Where Now For The Turkish LiraNorth Cyprus News – Where Now For The Turkish Lira?

Although the bold Turkish Central Bank move of raising interest rates had a temporary effect, it was short lasting because the market did not believe it. In other words, they expect the rates to fall back and believe the increase was just a message saying that the Turkish Central Bank could raise them if it wanted to.

Whilst poor exchange rates are not obvious to the average voter in Turkey, a 50% increase in the cost of borrowing is. For this reason it is expected that they would soon fall back as they have done in the past in other countries trying to save their currency. For example the British government on Black Wednesday in 1992 lifted interest rates from 10% to 15% for just a day in a failed attempt to defend sterling.

What is not helping the Turkish Central Bank’s attempt to save the Turkish Lira is the fact that Prime Minister Erdogan does not support the Governor’s move and it is well known what he does to people he does not support.

So, the Turkish Lira dropped to 3.56TL/£1 for a short while, down from 3.86TL/£1 with a short stop at 3.76TL/£1. It is now around 3.74TL/£1 and depending on what the Turkish Central Bank’s next move is, sell some more dollars perhaps, it isn’t expected to go to far from that level as long as Erdogan, behind the scenes, does not force the bank to undo the interest rate rise in the next few days.

My guess is a slow move back towards 4TL/£1 but then if I could predict the currency’s future I’d be a millionaire wouldn’t I?

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