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Lira in freefall as policymakers remain defiant

The Turkish lira has plunged this morning after President Erdogan signalled yesterday that policymakers have no appetite to respond to the currency’s recent falls by hiking interest rates. Further falls in the lira are likely to lie in store and we think that it will probably take the emergence of severe strains in the banking sector before policymakers respond with aggressive policy tightening. We aren’t there yet.
Jason Tuvey Senior Emerging Markets Economist
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