Turkish lira hits record low before central bank meeting

ISTANBUL (AP) — Turkey’s currency fell to a record low against the dollar before a central bank meeting on interest rates Thursday.

The lira traded at a low of 18.38 against the dollar, past the previous record low of 18.36 in December, before recovering to about 18.36.

Turkey has been following President Recep Tayyip Erdogan’s unorthodox belief that high interest rates cause high inflation while much of the world is increasing their policy rates to combat inflation.

The Turkish central bank last month lowered its benchmark rate by 100 points to 13%. Official statistics released earlier in September showed annual inflation at 80.21%.

Last year, the currency kept hitting record lows as the central bank lowered interest rates from 19%. When it finally hit 18.36 against the dollar, Erdogan announced extraordinary measures that he claimed would safeguard the lira.

The government encouraged people to swap their dollars for the lira and place them in a deposit account that would give the interest rate plus any lira depreciation against the dollar. Though the lira rebounded after that announcement to a high of 11.09, it steadily declined this year.