Turkish lira rebound ebbs as consumer confidence hits record low
Shafaq News/ Turkey's lira mounted a short-lived rebound from all-time lows on Monday as concerns loomed over last week's interest rate cut and speculation about a cabinet overhaul, while data showed consumer confidence plunging to a record low.
The lira traded at 11.20 at 0804 GMT, firmer than a close of 11.2995 on Friday. It has lost a third of its value this year and Friday's all-time weakest level of 11.32 marked an eighth straight session of record lows.
Last Thursday, under pressure from President Tayyip Erdogan, the central bank cut its policy rate by 100 basis points to 15% despite inflation near 20%, signalling more easing would come.
The bank has slashed the rate by 400 basis points since September in what many analysts have called a risky policy mistake.
The lira plunged some 12% last week alone, making it the worst performer globally. Its 6% crash on Thursday was the biggest since Erdogan, a self-described enemy of interest rates, sacked former hawkish central bank chief Naci Agbal in March.
The Turkish economy has rebounded strongly this year from the initial pandemic fallout, but the lira meltdown has unleashed growing concerns about the outlook and calls for an emergency rate hike or another defensive measure.
Consumer confidence slumped 7.3% to 71.1 points in November, official data showed on Monday, its lowest level since the data was first published in 2004, reflecting the currency sell-off.
Traders said the unease was heightened late last week by open speculation among politicians and investors that Erdogan might soon replace Finance and Economy Minister Lutfi Elvan, though there was no indication of any pending move.