Statements by Turkish President Recep Tayyip Erdogan, on Wednesday evening, in which he pledged to fight interest rates, led to a new decline of the Turkish lira by 2.5 percent.
Erdogan vowed earlier in the day to continue his fight against interest rates “to the end”.
The Turkish lira’s fall to new depths also comes a day before another expected rate cut from the central bank, according to “Reuters”.
Erdogan said he would raise “interest rates for the people” and urged companies to “invest, employ and increase exports.”
Lawmakers from Erdogan’s Justice and Development Party said the president told them he intends to lift what he called “the interest rate whip from people’s backs”.
Erdogan said, “Certainly we cannot allow our people to be crushed by interest rates. I cannot stand .. and I will not stand in this path with those who defend interest rates.”
These statements led to a spiral decline of the Turkish lira to become the worst performer among emerging market currencies this year by a large margin. Analysts attribute this collapse to premature and risky monetary easing.
The Turkish lira hit new record lows, falling to 10.67 against the dollar and 12 against the euro.
The Turkish lira has lost about 30 percent of its value since the beginning of the year, while it has lost two thirds of its value within 5 years, which drained the income of Turks in addition to inflation, whose rate is close to 20 percent.
Erdogan’s comments also prompted opposition leaders to call early elections, according to Reuters.