The Turkish lira has dropped 10% in the last 24 hours, extending its freefall this year, after President Tayyip Erdogan welcomed recent interest rate cuts and said the country will “emerge victorious from this war of economic independence”.
It was trading at 12.32 against the dollar late this morning and has slumped 40% this year.
Last week, the central bank cut rates (by 1 percentage point to 15%) for the third consecutive month, even though inflation has soared to almost 20% and economists have issued warnings about the risk of hyperinflation. The bank’s move followed a 200bps cut in October and a 100bps cut in September.
In an address on Monday, Erdogan said the country would not give in to economists, “opportunists” and “global financial acrobats” calling for interest rate rises, the Financial Times reported. The government was prioritising growth, he said, to encourage investment, production, exports and employment.