Turkey has means to curtail currency shifts: President

Turkish lira ‘in freefall

Turkish lira ‘in freefall

"The central bank governor and members of the monetary policy committee have my full backing in doing what's necessary to stem the slide in lira and achieve price stability", he wrote.

The bank said after an emergency meeting of its monetary policy committee it was raising the late liquidity window lending rate from 13.5 per cent to 16.5 per cent.

"I think markets are beginning to take fright at the extent of government interference over certainly central bank policy", he said.

The lira has lost more than 20 percent of its value against the dollar since the start of the year.

The lira dropped to over 4.91 against US dollar on Wednesday morning, down about 6 percent since Tuesday, before recovering some of its losses in the day, but still very prone to fluctuation.

Over the last month alone, the lira has lost over 18 percent in value against the dollar as fears grow over the health of the Turkish economy which is dogged by double-digit inflation despite high growth.

"There is an unhealthy situation in prices".

Economy Minister Nihat Zeybekci said the lira's current level was "abnormal", but added that, as yet, no permanent damage had been done to the economy.

Emerging markets' local currencies have been weakening against the US dollar since the beginning of this year.

But it is seen to be reluctant as President Recep Tayyip Erdogan wants rates low.

The Istanbul bourse said it was taking measures to convert its foreign exchange assets to lira to "fight speculative actions aimed at creating a negative image of Turkey", but it was unclear if this would have any impact on the currency.

Turkey´s embattled lira on Wednesday lost over 3.5 percent in value to hit new historic lows against the U.S. dollar, as markets watched to see if the central bank will take emergency action to buttress the currency.

He has also made statements that fly in the face of economic orthodoxy, describing interest rates as the "mother and father of all evil" and saying low interest rates help keep down inflation.

"Comments from the Turkish president raise the possibility that discretionary policymaking and policy predictability will come under pressure after June's elections", the credit rating agency Fitch said in a statement on Tuesday.

A botched coup in 2016 in Turkey was followed by a state of emergency which is still effective.

"Turkey's economy grew 7.4 percent a year ago and is still maintaining a growth trend at this level".

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