The Turkish lira is falling to a new record high at 9 lira per euro

The Turkish currency continued its decline today, Tuesday, and touched for the first time the 9-pound barrier in the euro, while investors were waiting to see whether the central bank might violate expectations and raise interest rates at its meeting this week to stem the decline of the local currency.

The pound fell in 14 of the past sixteen days and hit a new record low of 7.67 against the dollar during trading, after closing on Monday at 7.6365.

The pound has plunged more than 22% against the US currency since the beginning of the year, to come among the worst performing currencies in the world.

It also fell to a new record low against the European currency at 9 pounds per euro, extending its losses this year to about 26%.

Analysts, including Goldman Sachs analysts, say that the Turkish central bank will likely decide at its scheduled meeting on Thursday to raise the interest rate for the so-called delayed liquidity window, which currently stands at 11.25%, which is one of the highest interest rates it sets.

That may protect the pound from a further sharp decline. The currency has tumbled about 22% against its US counterpart since the beginning of this year and has lost about half of its value since the end of 2017.

But analysts say the move will only be a delay to an official rate hike, which has been sitting at 8.25%, since May.

Although most economists polled by Reuters do not expect an official rate hike this week, they believe that the central bank will continue to take measures to raise the weighted average cost of financing, which reached 10.4%, from 7.3%, in two months.

The credit rating agency said that Turkey’s external vulnerabilities will likely result in a balance of payments crisis, and that financial safety margins are eroding.

“The possibility of a financing shock remains the main danger that the Turkish economy faces,” said Ihsan Khoman, Director of Middle East and North Africa Research at MUFG Bank.

But President Recep Tayyip Erdogan, a constant critic of credit rating agencies, launched a new attack on these institutions over the weekend after the announcement of Moody’s decision, and in his remarks referred to Standard & Poor’s.

“You cannot dictate conditions to Turkey under the sword of sanctions. You did this before. Did you get a result? No, it did not happen. It will not happen in the future,” he said in the speech.

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