Turkey’s Lira at Crossroads

A customer uses a currency exchange bureau in Istanbul, Turkey, on Wednesday, June 2, 2021. Turkish President Recep Tayyip Erdogan renewed calls for lower interest rates despite elevated inflation, sending the lira to a fresh low against the dollar and prompting the central bank governor to push back against expectations of an imminent move.Photographer: Nicole Tung/Bloomberg

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June 6, 2021 at 1:10 PM UTC

Turkey President Recep Tayyip Erdogan’s latest intervention at monetary policy pushed the lira to fresh record lows against the U.S. dollar, putting the currency on a dangerous path.

Erdogan’s announcement that it is “imperative” for Turkey to begin lowering interest rates by some vague summer deadline spurred fears that the central bank might embark on a premature cycle of rate cuts (although the new governor quickly dismissed that possibility).