Turkish currency hits record low after central bank decides against hiking rates in support

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.