Turkey’s central bank governor said he discussed recent interest rate cuts with bankers at a meeting on Thursday after a slide in the lira to record lows, and he also said that the banking sector was able to overcome market volatility.
Turkey’s lira was flat on Thursday after a historic slide to all-time lows this week, triggered by President Tayyip Erdogan’s defence of interest rate cuts, despite widespread criticism of his policy direction.
Governor Sahap Kavcioglu said after the meeting with top bankers and the country’s BDDK banking watchdog that they made general evaluations on economic developments, and he said that the banking sector was very strong.
“We informed them about everything, whether it be interest rate cuts and other issues,” Kavcioglu told reporters after the meeting. “The sector, central bank and BDDK are very much in harmony and in strong communication.”
The lira was unchanged after the meeting, trading 0.5% firmer at 12.025 to the dollar. Before a rebound in the last two days, it hit a record low of 13.45 on Tuesday, down 45% this year, touching record lows in 11 consecutive sessions.
Global and domestic developments, the markets and banking sector developments were discussed at Thursday’s meeting, the Association of Turkish Banks said in a statement, describing the meeting as very beneficial.
One market participant said the BDDK told the meeting that it would consider measures such as the country’s capital adequacy ratio.
The BDDK was not immediately available for comment.
Separately, officials told Reuters Erdogan had ignored appeals, even from within his government, to reverse policy.
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