Morgan Stanley predicted the collapse of the lira by almost 40% after Erdogan’s victory
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If the current president of Turkey, Recep Tayyip Erdoğan, after his re-election for a new five-year term, will continue to advocate for maintaining low interest rates, the exchange rate of the lira against the dollar will fall by almost 40% by the end of the year. Morgan Stanley analysts warn about this, their forecast is provided by Bloomberg.
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Forecast of experts
Morgan Stanley experts predicted that by the end of 2023, the dollar could reach almost 28 lira, if Turkey does not change its approach to monetary policy.
As of 10:01 a.m., the US dollar/Turkish lira currency pair was trading at 20.05 lira per dollar on the international Forex market. This is 0.4% higher than the closing level on Friday, May 26.
Let’s remind
On May 28, the second round of presidential elections took place in Turkey. According to the Central Election Commission of Turkey, according to the results of the processing of 99.32% of the ballots, the incumbent President Recep Tayyip Erdogan won 51.91% of the votes, while his rival and candidate from the opposition “People’s Alliance” Kemal Kylychdaroglu – 48.09%.
Erdogan is known for his unconventional approach to monetary policy. The politician is sure that low interest rates contribute to the reduction of inflation, while the world’s central banks, on the contrary, raise interest rates to fight against rising prices.
Erdoğan said that if he wins the second round of the elections, inflation in Turkey will continue to decrease along with interest rates. In April, inflation in Turkey was at the level of 43.68% at a rate of 8.5%.
Source: Ministry of Finance
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