(FT) The Turkish lira traded at above 17 per dollar on Monday as investors digested President Tayyip Erdogan’s comments that he was not turning back on his moves to lower rates.
In defiance against warnings of lower rates, Erdogan says he will do whatever is necessary as per the Islamic decrees on usury to keep rates low.
Erdogan has insisted on four rate cuts in the past four months amid a spiraling currency crisis and rising inflation.
The Turkish president rubbished claims that he could be forced into instituting capital controls to salvage the falling currency. He says the country could pursue a “new economic model” to capitalize on low rates and bolster employment, investments, and exports.
Erdogan has defended the low rates saying the concerns of the currency crisis are temporary, preferring to call the monetary focus as a struggle for economic independence.
Analysts warn that high inflation in Turkey could plunge the country into financial instability due to its dependence on foreign financing.
Lira has now shed 50% of its value since the country’s central bank started reducing rates. It traded at around 17.5 against the dollar on Monday.
USDTRY is up +6.33%.
