Flickering screens at Istanbul bazaar show lira's turbulent fall

2 minute read

A money changer counts Turkish lira banknotes at a currency exchange office in Ankara, Turkey November 11, 2021. REUTERS/Cagla Gurdogan

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ISTANBUL, Nov 18 (Reuters) - At the foreign exchange offices outside Istanbul's Grand Bazaar, the flashing red lights showing the movement of Turkey's turbulent lira flickered constantly on Thursday as prices fluctuated wildly and plunged to a fresh record low.

Some customers seeking U.S. dollars queued outside the Atlas Exchange and Gold shop, hoping to catch the occasional moment when the lira broke its downward trend with a brief recovery.

Others with dollars to sell waited for the early afternoon interest rate decision by the Central Bank, which as expected cut rates for a third time in a row, driving the currency beyond 11 lira to the dollar for the first time.

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Either side of that decision, the currency seesawed sharply, swinging nearly 10% in a single day and weakening as far as 11.3 to the dollar for the first time.

For shopkeepers and customers at the 15th century market, the plunging lira and 20% inflation it helps fuel have driven up the cost of living, with prices rising at a bewildering pace.

"We cannot make ends meet," said shopowner Mehmet Karadag. "We are cashing $10,000 today, $20,000 tomorrow, but we cannot replace that. So we are really done. This is Turkey's situation at the moment."

The lira has lost a third of its value so far this year, the bulk of that in the last two months as the central bank, after repeated urging from President Tayyip Erdogan, eased interest rates well below inflation and accelerated the slump.

Erdogan says high rates push up inflation, contrary to most economists who say their impact is the opposite, and that lower rates should help businesses to borrow, invest and expand as he prepares for elections that must be held by mid-2023.

But opinion polls show a sharp fall in support for the man who has led Turkey for nearly two decades, as his ruling AK Party has gradually lost its reputation for economic management.

"Everything is so expensive, living conditions are getting really difficult," said Erkin Aytekin, a sailor. "We cannot affort some luxuries any more."

Muharrem Kilic, a 16-year-old student, said the future looked bleak, and the bank was wrong to cut rates.

"There will be price hikes, one after the other," he said.

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Writing by Dominic Evans; Editing by Nick Macfie

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