Turkish lira plunges after Erdogan defends rate cuts

ANKARA, Turkey (AP) — The Turkish currency has weakened by some 10% against the U.S. dollar, a day after President Recep Tayyip Erdogan insisted there would be no turning back from his unconventional policy of cutting interest rates despite high inflation. The lira plunged to a record low of 13.44 on Tuesday before making some gains. It was trading at 12.51 against the dollar in the late afternoon, down 9.9% from Monday’s close. The currency was trading at 14.08 against the euro. The lira has lost some 40% of its value since the start of the year. Contrary to traditional economic theory, Erdogan argues that steep interest rates cause inflation. Inflation is running at around 20%, eroding the public’s purchasing power.