101698119 turkishliraafp - Turkish lira plummets against dollar

Turkish lira plummets against dollar

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The Turkish lira has fallen more than 5% to hit a record low against the US dollar.

The currency has lost 22% of its value in 2018, as fears grow that the government might undermine the powers of Turkey’s central bank.

Many investors want to see a rise in interest rates to bring down inflation, which is in double figures.

However President Recep Tayyip Erdogan has described himself as an “enemy of interest rates”.

Mr Erdogan has said he plans to take more control of the country’s finances after the election on 24 June.

His deputy Bekir Bozdag has implied that foreign powers were to blame for the lira’s collapse.

“The people have seen the game and the player, the people have seen the puppet and puppeteers. They will not allow them or give an opportunity,” he said.

Economy Minister Nihat Zeybekci said the lira’s current level was “abnormal”, but added that, as yet, no permanent damage had been done to the economy.

The lira fell as low as 4.8450 against the dollar early on Wednesday before recovering.

Peter Dixon, an economist with Germany’s Commerzbank, says that investors are concerned about the amount of financial power which could end up in Mr Edogan’s hands

“I think markets are beginning to take fright at the extent of government interference over certainly central bank policy,” he said.

“That’s certainly been one of the factors which has caused the lira to lose ground. It’s been a trend which has been ongoing for some time, but I think the rhetoric is being cranked up now.”

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