ISTANBUL: The Turkish lira sank to a fresh record low against the dollar on Friday, as it remained under pressure due to expectations that the central bank may cut interest rates as early as next week.
In afternoon trading on Friday, the lira fell to as low as 2.43 to the dollar after hitting a record low of 2.41 late on Thursday.
Against the euro, the currency lost 0.8 percent in value to trade at 2.75 lira to the euro.
The currency has been under pressure since the governor of the Turkish central bank hinted on Tuesday that the bank could hold an extraordinary meeting as early as next Wednesday to cut rates.
"As a result of rate cut expectations, the lira remained under depreciation pressure," Finansbank economist Deniz Cicek said.
Economy Minister Nihat Zeybekci on Friday said the fall of the Turkish currency was "only natural, and not worrisome," urging the central bank to go ahead with plans to loosen its monetary policy.
"We are already too late to cut interest rates. I don't believe that the fall of lira would have an impact on rate cut expectations," he said.
"It is pointless to tolerate high interest rates due to concerns."
The lira was also hit by Federal Reserve's upbeat outlook on the US economy and signals that it was on course to hike interest rates this year.
Turkey's central bank is nominally independent but this has not saved it from very public pressure from the President Recep Tayyip Erdogan for aggressive cuts to stimulate growth.
A year ago, the bank aggressively raised key rates to avert a major economic crisis following a steep drop in the value of the the lira.
Last week, it lowered the one-week repurchase rate to 7.75 percent from 8.25 percent, the first reduction in six months. But Erdogan is still pressing for further cuts.
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