ISTANBUL: The Turkish lira dipped 2% on Wednesday, slipping back towards record lows, as President Tayyip Erdogan renewed his commitment to low interest rates and dismissed European calls to release two prominent prisoners on trial in Turkey.
The lira, which strengthened on Tuesday, weakened as far as 13.7350 against the dollar from a close of 13.45 a day earlier. It has lost 46% of its value to the US currency this year, touching an all-time low of 14.0 last week.
The slide has been driven by aggressive monetary easing which economists and opposition politicians say is reckless. Inflation jumped to a three-year high of 21.3% last month.
Despite its depleted reserves, the central bank intervened in markets twice last week over what it called unhealthy prices, keeping the lira below 14 to the dollar.
The central bank has slashed its policy rate by 400 basis points since September, under pressure from Erdogan, and is expected to ease policy again this month.
Speaking on a flight returning from Doha, Erdogan was quoted on Wednesday by Turkish media as saying he does not recognise European rulings seeking the release of philanthropist Osman Kavala and Kurdish politician Selahattin Demirtas and will abide by Turkish court rulings on them.
Last week the Council of Europe told Turkey it was preparing "infringement proceedings" over its failure to release Kavala, a move that could lead to Ankara's suspension from the body. It also urged Turkey to release Demirtas.
Erdogan was also reported as saying that Turkey will reduce inflation and exchange rate volatility through low interest rates.
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