Turkey’s lira fell to a record low for a third consecutive day after Economy Minister Nihat Zeybekci said the central bank did not go far enough with rate cuts.
Speaking on state TV channel TRT, he said that the foreign exchange market “will find its own balance,” and there was no need to worry about the currency.
On Wednesday, a selloff pushed the lira as low as 2.6006 per US dollar (3.9656 GBP) on Thursday. Fears that the government will undermine the autonomy of the Turkish central bank, caused Turkish bonds to fall the most in emerging markets in the past month. President Recep Tayyip Erdogan said on Monday that policy makers should take into account his warnings that interest rates are too high.
“Expectations are for the central bank to continue cutting rates in the coming months on political pressure,” Erkin Isik, a strategist at Turk Ekonomi Bankasi AS, said in an e-mailed note. “The bank is not taking any action against currency depreciation, which suggests that the lira has room to weaken further, in the absence of revival in global risk sentiment.”
Citigroup’s decision to sell its remaining stake in Turkish lender Akbank TAS at a discount to the share price, pushed the nation’s stock index to the lowest in almost three months. The currency fell for a seventh day, the longest downturn since a 10-day rout in January, 2014 that created a rise in interest rates of more than double.