Reasons for weaker Turkish lira revealed

Turkey’s President Recep Tayyip Erdogan renewed calls for lower interest rates, pushing the lira to a fresh low against the dollar and piling pressure on his central bank governor to ease policy despite high inflation, Report informs referring to Bloomberg.

“I spoke with our central bank governor today. It’s an imperative that we lower interest rates. For that, we will reach July and August thereabouts so that rates can begin to fall,” the Turkish leader said in an interview with state broadcaster TRT late June 1.

The lira weakened around 3 percent early June 2 to reach past 8.8 per dollar following the remarks by Erdogan, who holds the unorthodox belief that lower borrowing costs will help slow inflation, unlike what most central bankers around the world think.

The lira was 1 percent weaker at 8.6217 against the dollar as of 9:14 a.m. local time. The currency is the worst performer among emerging-market currencies this year, having lost more than 16 percent against the dollar since Erdogan fired Kavcioglu’s predecessor.