ANKARA: Turkey’s embattled currency, the lira, on Tuesday hit new historic lows against the US dollar after Fitch ratings agency expressed concerns over the central bank’s independence in the wake of comments by President Recep Tayyip Erdogan.
Fitch said that comments by Erdogan last week that he plans to have a greater say in monetary policy if he wins June elections raised the possibility of economic policy becoming more unpredictable after the polls.
In an interview with Bloomberg TV while on a visit to London, Erdogan signalled he wanted to take greater control over monetary and economic policy even if this “may make some uncomfortable.”
“An explicit threat to curb the central bank’s independence increases risks to the policymaking environment and to policy effectiveness,” Fitch said in a statement.
It warned that the president’s comments raised the possibility of “overall economic policy, not just monetary policy, becoming less predictable after the elections.”
After the statement, the Turkish lira hit 4.65 against the dollar after 1300 GMT, a loss of 1.7 percent before it slightly pared back some of its losses to reach 4.63 before 1400 GMT.
The lira has lost over 14.9 percent of its value against the greenback in the past month
Erdogan has called for low interest rates to ensure strong growth.
And he often calls for lower rates to help reduce double-digit inflation, a position that flies in the face of economic orthodoxy. Inflation is currently at 10.85 percent.
The bank’s next monetary policy meeting is on June 7, but there have been calls on the bank by economists to hold an emergency meeting before then and implement a sharp rate hike before it’s too late to have any effect.
Fitch, which like other global ratings agencies currently assesses Turkish sovereign debt as deep into junk status, warned that erosion of the central bank’s independence would put “further pressure on Turkey’s sovereign credit profile.”
It said that after the elections “tougher global financing conditions will test the vulnerability created by Turkey’s large external financing requirement.”
Turkey lira hits new historic lows during president Erdogan reign
Turkey lira hits new historic lows during president Erdogan reign
- Turkish currency hit new historic lows after Fitch ratings agency expressed concerns over the central bank’s independence under President Erdogan.
- President Erdogan signalled he wanted to take greater control over monetary and economic policy if he wins June's elections.
Top US defense official hails ‘model ally’ in South Korea talks
SِEOUL: The Pentagon’s number three official hailed South Korea as a “model ally” as he met with local counterparts in Seoul on Monday, days after Washington’s new defense strategy called for reduced support for partners overseas.
Under Secretary of Defense for Policy Elbridge Colby arrived in South Korea on Monday and is seen as a key proponent of President Donald Trump’s “America First” foreign policy.
That policy — detailed in Washington’s 2026 National Defense Strategy (NDS) released last week — calls for the United States to prioritize deterring China and for long-standing US allies to take “primary responsibility” for their own defense.
Arriving in Seoul on his first overseas trip as the Pentagon’s number three official, Colby in a post on X called South Korea a “model ally.”
And he praised President Lee Jae Myung’s pledge to spend 3.5 percent of the country’s GDP on the military.
That decision, he told a forum, “reflects a clear-eyed and sage understanding of how to address the security environment that we all face and how to put our storied and historic alliance on sound footing for the long haul,” according to South Korea’s Yonhap News Agency.
“Such adaptation, such clear-eyed realism about the situation that we face and the need for greater balance in the sharing of burdens, will ensure that deterrence remains credible, sustainable and resilient in this changing world,” he added, according to the agency.
Colby also met Monday with South Korea’s defense and foreign ministers, who touted Seoul’s development of nuclear-powered attack submarines as proof the country was taking more responsibility for its defense.
Details remain murky on where the nuclear submarines will be built, however.
South Korea’s leader said last month it would be “extremely difficult” for them to be built outside the country.
But Trump has insisted they will be built in the United States.
Longstanding treaty allies, ties between the United States and South Korea were forged in the bloodshed of the Korean War.
Washington still stations 28,500 troops in South Korea as a deterrent against the nuclear-armed North.
