A significant depreciation of the Turkish lira could lead Turkey to a major financial crisis. Fears that Turkey is on its way to a full-scale financial crisis have increased after the lira plunged to new lows against the US dollar.
The central bank had to intervene in the market after the dollar approached 15 Turkish liras today. Official interest rates have been cut from 19% to 15% since September, and markets are preparing for another percentage point cut by the central bank on Thursday.
Some analysts said the lira's decline and the threat of a lira downgrade .may force the government to take a more cautious approach. That the relative stability of the Turkish lira last week, was artificial and unsustainable, the central bank’s attempts to stabilize the lira through interventions are likely to fail.
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