May 09 2018

Erdoğan calls meeting on economy; lira reverses losses

Turkish President Recep Tayyip Erdoğan called a meeting of the country’s top economic officials and advisers after the lira plumbed new lows against the dollar.

The meeting will be held later on Wednesday at the presidential palace in Ankara, Milliyet newspaper reported.

Turkey’s lira reversed earlier losses, trading up 0.8 percent at 4.2998 per dollar at 10:20 a.m. after sliding to as low as 4.37 earlier.

Economists, the International Monetary Fund and ratings agencies have called on Turkey to tighten monetary policy to defend the lira and avoid a hard landing for the economy. Erdoğan has implemented tax cuts and incentives to boost economic growth, leading to faster inflation and a current account deficit that has reached almost 6 percent of gross domestic product.

Milliyet didn’t provide further details of the meeting’s agenda or what decisions might be reached. Erdoğan has called snap general elections for June 24 and has opposed interest rate increases, saying they are inflationary.

Analysts say a rate increase of at least 300 basis points to 16.5 percent is needed to arrest the lira’s decline and help rein in inflation. The central bank raised rates by 75 basis points two weeks ago.