The Central Bank of Turkey has announced measures to keep the economy afloat and introduce steps for maintaining financial stability in the wake of downfall of Lira in the wake of recent economic sanctions by US. The bank has also vowed to give all kinds of support and liquidity needed by the banks.
Turkish Currency Lira showed dismal performance in the Asia Pacific Trade markets by touching historic lows of 7.24 against the US dollar. The announcement of the Central Bank bought some respite to the falling currency which has lost nearly 45 percent of its value this year. The decline has been triggered by the economic policies of President Erdogan who has pushed for lower interest rates despite high inflation and deteriorating ties with US.
The Central Bank has stated that it will have a close watch at the depth and price formations and also take steps for maintaining financial stability. The investor sentiment is also sunk especially as fears of sell-off of Lira can have a ripple effect on the financial markets of Europe, South Africa and also Mexico. EU has also raised concerns about the effect of Lira on Central European Bank.
Turkish leadership has blamed US for the turbulence in the economy and has described the recent economic sanctions as an economic war.
President Erdogan is looking for cheaper loans form Turkish banks and describes himself as an “enemy of the interest rates”. However, there are growing concerns about overheating of the economy. President has dismissed all worries and concerns and has stated that the recent effect on Lira are not a reflection of the economic health of the country but a plot. The recent row with US over the jailing of American pastor Andrew Brunson in Turkey on charges of terrorism has further worsened the relations between long-term NATO allies. In addition, the two nations also share many points of contention ranging from Turkish interests and ventures in Syria, its weapons deal with Russia etc. The jailing of the pastor invoked US to sanction two Turkish ministers and also doubled the tariffs on steel and aluminium.