Economics
Lira Falls to New Record as Erdogan Plan Spooks Investors
- President’s intent to influence policy cuts bets on rate hike
- Saxo Bank’s John Hardy says the market will punish the lira
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The Turkish lira and bonds plunged to a new record and credit risk surged after President Recep Tayyip Erdogan said he plans to take more responsibility for monetary policy if he wins an election next month, spooking investors who worry about his distaste of high interest rates.
Erdogan’s comments are spoiling bets that a meeting at his palace last week with economic policy makers -- including central bank governor Murat Cetinkaya -- would open the way for rate increases that some investors say are necessary to backstop the nation’s assets. Some traders had been positioning for a hike at an unscheduled monetary policy meeting.