The Turkish lira plunged to 14.75 against the U.S. Dollar, prompting Turkey’s Central Bank to intervene and sell off foreign currency.
The lira plunged to new records as the bank cut borrowing costs by 4 percentage point since September, despite rising inflation.
These rate cuts follow President Recep Tayyip Erdan's wishes. Erdogan has long advocated for keeping interest rates low to stimulate growth. While economists may argue for raising rates to curb inflation, Erdogan insists that rising interest rates are a cause of higher prices.
Erdogan remains firm in his policy of low borrowing cost, which raises expectations for another rate cut by the Central Bank's Monetary Policy Board meeting on Thursday. According to media reports, S&P Global Ratings has lowered Turkey's credit rating from stable to negative, adding to the concerns.