ANKARA, Turkey – Turkey’s currency, the lira, has fallen to a record low after the central bank decided against supporting it with an interest rate increase.
The lira has dropped recently amid concern that a bribery scandal might destabilize the government. The drop risks causing a spike in inflation, which the central bank is tasked with keeping low.
But the central bank on Tuesday kept the overnight rate at 7.75 per cent, a decision some analysts said was taken under pressure from the government.
The bank is an independent body but the move came a day after Economy Minister Nihat Zeybekci warned a hike would have a “lasting cost” on the economy.
Prime Minister Recep Tayyip Erdogan said the central bank’s decision was “right.”
The lira dropped to 2.25 against the dollar.