Turkish lira slides again, approaching historic lows

• The lira fell 2% against the dollar and was trading at 17.1 in the afternoon.
• President Erdogan has insisted on cutting interest rates despite rising inflation.
• The Turkish economy has been in free fall since last year.

The Turkish currency fell more against the dollar on Wednesday, increasing pressure on President Recep Tayyip Erdogan’s government, which has insisted on cutting interest rates despite rising inflation.

The lira fell 2% against the dollar and was trading at 17.1 in the afternoon, not far from the historic lows of more than 18 observed in December.

“The pressure continues to mount on the Turkish lira,” said Forex.com analyst, Fawad Razaqzada, in a note to clients.

Read More: Russia inflation slows in May: statistics agency

“President Tayyip Erdogan has once again vowed to continue slashing interest rates despite annual inflation running at more than 70 percent,” the analyst wrote, asking whether the lira might fall even further to 20 versus the dollar soon.

“Investors are also concerned that rising oil prices will just add to Turkey’s inflation misery,” Razaqzada said.

On Monday, Erdogan insisted that his government was opposed to higher interest rates even as inflation in the country soars to its highest level in nearly 25 years.

“This government will not hike interest rates. On the contrary, it will reduce them,” Erdogan said.

According to official data, Turkey’s inflation rate reached 73.5 percent in May, the highest level since 1998.

The Turkish economy has been in free fall since last year, when Erdogan, who is running for re-election next year, put pressure on the central bank to begin cutting interest rates.

Read More: India hikes interest rates 50 basis points to fight inflation