Turkish lira falls further as Erdogan stands firm on rates

The Turkish currency has reached another record low against the U.S. dollar after President Recep Tayyip Erdogan stood firm on his policy to lower interest rates despite rising consumer prices

ANKARA, Turkey -- The beleaguered Turkish currency reached another record low against the U.S. dollar Monday, a day after President Recep Tayyip Erdogan stood firm on his policy to lower interest rates despite rising consumer prices and slammed business groups that called for a change of course.

The lira tumbled to an all-time low of 17.70 against the dollar — more than 7% weaker from Friday’s close. The Turkish currency has depreciated by more than 55% against the dollar since the start of the year.

Even though official figures show that annual inflation has accelerated to 21%, the Central Bank has cut a key interest rate by 5 percentage points — to 14% — since September. The bank is widely believed to be acting under pressure from Erdogan, who has proclaimed himself an enemy of interest rates and dismissed three bank governors over reported disagreements on borrowing costs.

Erdogan has long argued that high interest rates cause inflation, contrary to conventional economic thinking. He has vowed to keep rates low and prioritize growth, exports and employment.