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Calls for interest rate hike do not benefit Turkey, says minister

Turkey's lira has taken a drubbing since coalition talks between the governing AK Party and the main opposition broke down last week

Published: Updated:

Turkish Economy Minister Nihat Zeybekci said on Tuesday that calling for interest rates to be raised did no good to Turkey, in comments ahead of a central bank meeting where some economists expect a rate hike.

Speaking to reporters after the lira slipped to a fresh record low against the dollar overnight, Zeybekci said that the recent dollar appreciation was "totally speculative".

Turkey's lira has taken a drubbing since coalition talks between the governing AK Party and the main opposition broke down last week, raising the likelihood of fresh election against a backdrop of mounting violence in the country's southeast between government forces and Kurdish PKK militants.

Analysts say the central bank, which holds a rate-setting meeting on Tuesday, desperately needs to hike rates to shore up the currency.

But Nihat Zeybekci said that, while he did not expect a cut this week, Turkey's benchmark borrowing costs should be lowered. The lira was at 2.8570 to the dollar at 1130 GMT after earlier touching a record low of 2.8614.