Turkish lira slides to new low after jump in US inflation

Business News

A man works at a food shop, in Ankara, Turkey, Tuesday, Nov. 9, 2021. Rampant inflation and unemployement are hitting Turks hard as energy and consumer prices skyrocket and the Lira dips to historic lows. Inflation rates officially announced by the Turkish Statistical Institue (TUIK) indicate consumer inflation to be around 20%. Independent researchers at the Inflation Research Group (ENAG) offer contrasting rates as the figure they calculated shows a figure of almost 50%.(AP Photo/Burhan Ozbilici)

ANKARA, Turkey (AP) — The Turkish lira slid to a record low against the U.S. dollar again Thursday after a surge in U.S. consumer prices inflamed concerns over President Recep Tayyip Erdogan’s push to cut interest rates.

The lira dropped to an all-time low of 9.97 against the dollar early Thursday before settling at around 9.93 against the U.S. currency. The Turkish currency has lost some 25% of its value since the start of the year.

The lira’s slump came after U.S. consumer prices jumped 6.2% in October compared with a year earlier, the highest inflation rate since 1990, according to the U.S. Labor Department. The increase was 0.9% from September to October.

Erdogan has long been pressing for lower borrowing rates to boost growth. Economists generally view higher interest rates as a curb on inflation, but the Turkish president has repeatedly argued that high interest rates cause prices to increase.

Despite rising inflation, Turkey’s Central Bank has cut the main interest rate by 3 percentage points to 16% from 19% since September, compounding a long run of losses. Turkey’s official inflation rate hit 19.9% in October.

Earlier this year, Erdogan fired the previous Central Bank governor after he raised interest rates in a bid to tame inflation.

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