Turkish lira falls by 3.1% as rate-cut tensions build

The Turkish lira is witnessed to encounter a record low as traders prepare for an economic setback, in terms of the undermining of currency.

The Turkish lira tumbled to another record low as traders braced for the central bank to press on with an easing cycle that has fanned inflation and undermined the currency.

A merchant counts Turkish lira banknotes at the Grand Bazaar in Istanbul, Turkey. (REUTERS)

The lira dropped as much as 3.1%, falling past the psychologically important 15-per-dollar mark for the first time.

The central bank is expected to reduce the one-week repo rate by 100 basis points to 14% on Thursday, according to the median estimate of 22 analysts surveyed Bloomberg. That’s well below inflation, which rose to 21.3% in November, the fastest pace in three years.

Officials have slashed the key rate by 400 basis points since September, falling in line with President Recep Tayyip Erdogan’s demands for looser monetary policy to help boost growth and create jobs.

The lira dropped more than 40% since the bank started cutting rates, by far the most in emerging markets.