ISTANBUL. The Turkish lira remained unchanged Thursday after a historic slide to record lows this week fueled by President Tayyip Erdogan’s defense of interest rate cuts, despite widespread criticism of its policies.
By 1044 GMT, the lira was worth 12.09 against the dollar, after gaining 2% to hit 11.85 in early trading. On Tuesday, it reached its lowest level on record at 13.45.
Before the rebound, the currency hit record lows against the US currency in 11 straight sessions. It has lost 45 percent of its value this year, with about half of those losses occurring at the beginning of last week.
Fixed income markets looked more cautious given that the cost of insuring a country’s sovereign debt risk through credit default swaps pushed 1 basis point higher than Wednesday, close to 478 basis points, while longer-term sovereign dollar bonds dollar denominated declined.
The central bank was scheduled to release minutes of last week’s monetary policy committee meeting at 11:00 GMT, in which it cut its policy interest rate by 100 basis points, bringing it down to 400 points since September.
Many Turks, already struggling with inflation of around 20 percent, fear an acceleration in price increases. Opposition politicians have accused Erdogan of leading the country to disaster.
Erdogan defended central bank policies and pledged to win his “economic war of independence” by forcing the central bank to engage in an aggressive easing cycle to boost exports, investment and jobs.
But many economists characterized the rate cut as reckless, and opposition politicians called for an immediate election. The Turks told Reuters that the dizzying currency plunge had turned their family budgets and plans for the future.