The Turkish lira slid to a record low against the US dollar again Thursday after a surge in US consumer prices inflamed concerns over President Recep Tayyip Erdogan’s push to cut interest rates.
The lira dropped to an all-time low of 9.97 against the dollar early Thursday before settling at around 9.93 against the US currency. The Turkish currency has lost some 25% of its value since the start of the year.
The lira’s slump came after US consumer prices jumped 6.2% in October compared with a year earlier, the highest inflation rate since 1990, according to the US Labor Department. The increase was 0.9% from September to October.
Erdogan has long been pressing for lower borrowing rates to boost growth. Economists generally view higher interest rates as a curb on inflation, but the Turkish president has repeatedly argued that high interest rates cause prices to increase.
Despite rising inflation, Turkey’s Central Bank has cut the main interest rate by 3 percentage points to 16% from 19% since September, compounding a long run of losses. Turkey’s official inflation rate hit 19.9% in October.
Earlier this year, Erdogan fired the previous Central Bank governor after he raised interest rates in a bid to tame inflation. [AP]