The Turkish lira hit levels not seen since December on Wednesday, approaching its all-time low after Turkish President Recep Tayyip Erdogan called for another interest rate cut.
The Turkish currency, down 2% on the day, was trading above 17 pounds to the dollar on Wednesday afternoon, a level not seen since December, when the currency collapsed to reach 18.4 pounds to the dollar.
The pound has lost more than 22% against the dollar since January 1 and 49.7% over one year.
Pressure continues to mount on the Turkish lira, commented Fawad Razaqzada, analyst at CityIndex, recalling that President Erdogan on Monday announced his intention to lower interest rates again as inflation in Turkey hit 73, 5% over the year in May.
Investors are also concerned that rising oil prices will worsen inflation in Turkey, the analyst added.
The Turkish president believes, contrary to traditional economic theories, that high interest rates promote inflation.
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He had forced the central bank at the end of 2021 to lower its key rate from 19% to 14%, between September and December, causing the collapse of the national currency.
Inflation is at its highest in Turkey since December 1998, driven by rising energy and food prices and aggravated by the war in Ukraine.