Turkish President Recep Tayyip Erdogan’s demand for interest-rate cuts sent a brief shockwave through the lira, with the currency hitting a new all-time low.
But among traders and analysts, the reaction was: we’ve all seen this before. After Erdogan fired his previous central bank governor in March, it was only a matter of time before he started bearing down on a path to lower rates.
“The Turkish story is well known and has been ongoing for a while now, so I get the sense that investors would not have been caught off-guard,” said Todd Schubert, head of fixed-income research at Bank of Singapore Ltd. “There is little risk of heavy foreign fund outflows.”