President Recep Tayyip Erdogan has sent Turkey's lira currency to new all-time lows after he called for interest rate cuts in the next two months. The currency weakened more than 4% to a record low of 8.88 after the comments.
" I spoke to the central bank governor today, we certainly need to lower interest rates, we need to see July, August for interest rates to start coming down", Erdogan told a televised interview, adding that lowering interest rates would lift the burden on investments.
The comments by Erdogan, a self-described “enemy of interest rates”, sent the lira, which has already been under pressure in the past week, sharply down to fresh record lows against the dollar.
Erdogan’s frequent calls for lower borrowing costs and his sudden sacking of the last three central bank governors have seriously eroded the central bank’s credibility.
His decision to sack former central bank governor Naci Agbal in March sent the lira down 12% against the dollar in a week.
The currency, by far the worst performer among emerging markets this year, was battered again last week on concerns over global inflation and an early election in Turkey.
Turkey, which relies on foreign currency income from tourism to shore up its current account deficit, risks another lost season this year as several countries imposed restrictions on travel due to the high number of COVID-19 cases.
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