Turkish Lira Dips To All-Time High Against Erdogan Rate Comments


ANKARA, Turkey (AP) – The Turkish lira fell to a new all-time low on Wednesday after President Recep Tayyip Erdogan shook investor confidence by saying he spoke to the central bank governor about the need to lower interest rates.

The pound weakened about 3% on Wednesday morning following Erdogan’s comments, hitting 8.8 against the dollar. It then gained ground, stabilizing at 8.62 against the dollar.

“I spoke to the governor of the central bank today. It is imperative that we lower interest rates, ”Erdogan said in an interview Tuesday night with public broadcaster TRT. He suggested July or August as a possible target date for a rate cut.


In March, Erdogan sacked his third central bank chief in less than two years and appointed Sahap Kavcioglu, who, like the Turkish leader, has strongly advocated for lower interest rates. The move raised concerns about a possible return to unconventional monetary policy as the country grapples with persistent inflation.

Typically, higher interest rates strengthen a currency and help fight inflation. Erdogan argued the opposite, that high rates cause inflation.

Before being sacked, the former central bank governor had raised interest rates by 2 percentage points more than expected.


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