© Reuters. Turkish Central Bank warns against speculation after lira fell 11%
Istanbul, Nov 23 (.) .- The Turkish lira lost 11% of its value against the euro and the dollar on Tuesday, the largest daily collapse in several years, prompting the Central Bank to warn against the risks of do business in this situation and remember that you could step in if volatility is excessive.
“Unhealthy price developments are observed, which are not realistic and are completely unrelated to the economic bases,” the Bank said in a statement.
The currency lost 13% in the first half of the day, recovered 5% thereafter and fell again, hovering around 14.5 units per euro, a loss of 11%, at the close of the markets.
The Bank recalled in its note that the exchange rate of the lira is determined by supply and demand in the free market and that the institution “does not commit itself to any level of exchange, although under certain conditions it can intervene against excessive volatility, without claim a permanent address. “
“The Bank considers it necessary to warn companies and citizens against possible losses when doing business with securities totally unrelated to economic bases under extremely volatile market conditions,” the statement concludes.
The decision of the Central Bank, last Thursday, to reduce interest rates to 15%, when inflation is close to 20%, precipitated the fall of the currency, which has already lost 37% of its value so far of the year and that accumulates a depreciation of 20% since last Tuesday.
The lira’s slide began its most recent slide on Monday afternoon, apparently in reaction to remarks by Turkey’s President Recep Tayyip Erdogan, in which he defended low interest rates, while vowing to “crush” those who use “the foreign exchange market as a false pretext” to raise prices.
The rising cost of living is obvious in stores in Turkey, where some traders claim that they must change the price tags “daily”, because also the cost of local products depends on the foreign exchange market, since the country imports many raw materials, as well as fuel and energy.
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