Turkey’s currency tumbled late on Wednesday below its May low, nearing 5 lira to the dollar, amid a sharp deterioration in investor sentiment.
Late in the New York trading day on Wednesday, the lira dropped to the TL4.9743 mark, according to Bloomberg data. The fall pushed the lira below the low of TL4.9221 it struck in a hectic trading day on May 23 that ultimately forced the central bank to raise interest rates.
The currency has faced a tumulous few trading days. It rallied earlier in the week on expectations President Recep Tayyip Erdogan would appoint market-friendly officials to his cabinet.
But sentiment worsened after he chose his son-in-law for a powerful economic post. Mehmet Simsek, the former deputy prime minister who was a familiar face to international investors, was not given a role in the new government.
The lira’s fall accelerated on Wednesday after Mr Erdogan, an avowed critic of high interest rates, forecast a fall in rates. The comments deepened investor angst that the newly-reelected president will throw fresh fuel on an already overheating economy.
Inflation is running above 15 per cent, and data released earlier on Wednesday indicated the economy is increasingly vulnerable to exogenous shocks.
The lira pulled back from its low as a new trading day got under way in Asia, trimming back those losses to trade at TL4.9233. Additional reporting by Jessica Dye in New York.
Additional reporting by Jessica Dye in New York
