Lira Weakens Past 12 Per Dollar After Erdogan Defends Low Rates

The Turkish lira tumbled to a record low on Tuesday, a day after President Recep Tayyip Erdogan defended his pursuit of lower interest rates to boost economic growth and job creation.

The currency fell past 12 per dollar and was trading 5.6% lower at 12.0580 per greenback as of 11:28 a.m. in Istanbul. The benchmark Borsa Istanbul 100 Index was trading 1.5% higher led by shares of companies with hard currency income.

Erdogan Defends Pursuit of Lower Interest Rates as Lira Sinks

On Monday, Erdogan said Turkey has abandoned old policies based on high borrowing costs and a strong currency in the name of slowing inflation, and instead shifted to a new set-up that prioritizes greater investments, exports and strong job creation.

While most central banks are talking of tightening policy as the global recovery fuels a surge in prices, Turkey’s decision to slash 4 percentage points off borrowing rates since September has rattled markets and frustrated investors who complain its monetary policy is becoming increasingly erratic and unpredictable.