The battered currency fell as low as 8.88 to the dollar, a 4% drop, later recouping some losses to trade at around 8.59 as markets closed in Istanbul.
Speaking to Turkish state television Tuesday night and referring to a discussion with his recently appointed central bank governor, Erdogan said: “I even spoke to the central bank governor today — we certainly need to lower interest rates. For that, we need to see July, August for interest rates to start coming down.” He added that lower rates would ease pressure on investments.
The comments sent more jitters through Turkish markets, making the already weak lira ever more vulnerable. Investors are concerned about the central bank’s lack of independence from Erdogan, who has said that interest rates are “the devil” and holds the unconventional belief that cutting them will reduce inflation — the opposite of what most economists say is the case.
Reference: CNBC
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