The Turkish lira slid 0.9 percent against the dollar on Wednesday, bringing its losses to 22 percent this year, after worries about a surge in inflation were fueled by President Tayyip Erdogan’s pledge to keep cutting interest rates.
The lira stood at 16.93 against the US currency at 0611 GMT, weakening from Tuesday’s close of 16.7650 towards a record low which it hit on December 20 in a currency crisis triggered by a series of unorthodox interest rates cuts.
Speaking after a cabinet meeting on Monday, Erdogan said Turkey will not raise interest rates but rather continue cutting them in the face of high living costs.
The lira shed 44 percent last year and has been the worst performer in emerging markets for several years running due largely to economic and monetary policy concerns under Erdogan’s government.
Turkey five-year credit default swaps closed above 730 basis points, at levels last seen during the global financial crisis in 2008, data from S&P Global showed.