Turkish President Tayyip Erdogan today called for a cut in interest rates he described as "the mother and father of all suffering", leading the pound to fall again as investors worried about the central bank's ability to cut interest rates. high inflation.
The Turkish currency slipped to the level of 4,3030 pounds per dollar after Erdogan's statements, while yesterday it had closed at 4,2374 pounds. On Wednesday, it had fallen to a record low of 4,3780 pounds per dollar, to recover strongly the next day. "If the people tell me to continue on this path in the elections, I declare that I will be victorious in the fight against this curse," Erdogan told Ankara, referring to the June 24th snap elections. "Because my belief is: interest rates are the mother and father of all suffering," he said in a speech to businessmen.
Yesterday's recovery of the pound was driven by the news of an emergency meeting between Erdogan and his financial staff to deal with massive sales of the pound, which has fallen more than 10% against the dollar this year. At the meeting, Erdogan and the financial staff agreed to take steps to reduce pressure on interest rates and protect the pound.
The Turkish central bank last month raised its interest rate to boost bank liquidity to 13,5% from 12,75%.
Inflation stood at 10,85% in April on an annual basis, well above the central bank's 5% target. Investors appear to have been hoping for some additional tightening measures from the central bank, which boosted liquidity this week to support the pound.