ISTANBUL: Turkey's lira weakened 1% on Wednesday, extending losses a day earlier as investors weighed up the impact of a surge in inflation to a 19-year peak after last year's plunge in the currency's value.
The lira slipped as far as 13.60 against the dollar from a close of 13.45 on Tuesday, when it weakened 3.6%. At 1451 GMT, it stood at 13.5405.
In 2021, the Turkish currency suffered its worst year since President Tayyip Erdogan's AK Party came to power in 2002, tumbling 44%. It hit a record low of 18.4 per dollar two weeks ago before rebounding after the government unveiled a deposit-protection scheme.
The lira slide and a series of administered price rises - including for utilities and wages - are forecast by economists to push inflation higher this year after data on Monday showed the annual rate reached 36.1% in December.
Finance Minister Nureddin Nebati said on Wednesday the government would now prioritise the fight against high inflation but added that it had abandoned "orthodox policies" and was charting its own course.
"We have put aside orthodox policies, now it is heterodox policies," he told a business group in a speech, vowing to introduce new instruments to support production-focused, manufacturing and export-oriented companies.
Turkish lira slips as inflation seen soaring higher
Speaking to his ruling AK Party on Tuesday, Erdogan said he would not abandon Turks to "extreme" price hikes and volatile exchange rates.
"God willing, we have left the worst behind us. From now on, it is time to reap the benefits of our efforts, to show our people that we are approaching our goals."
Under pressure from Erdogan, who overhauled the central bank's leadership last year, the bank has slashed its policy rate by 500 basis points to 14% since September.
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