Turkish lira crashes to new low against the dollar

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"The Central Bank will continue to use all available instruments in pursuit of the price stability objective".

Following the bank's decision on interest rates, Turkish Deputy Prime Minister Mehmet Simsek - responsible for the economy - said on social media it was time to restore monetary policy credibility and regain investor confidence.

Tuvey said investors will still be waiting to see signs that Turkey is serious about tackling its high inflation and high current account deficit, and not loosen fiscal policy ahead of the election.

The Turkish lira has fallen more than 5% to hit a record low against the USA dollar.

After the steps taken by the officials, the lira recovered to 4.55 against US dollar and 5.33 against euro after the day's record lows of 4.92 and 5.74, respectively.

Top economic officials met on Monday to discuss measures against the currency crisis.

The U.S. dollar gained around 26 percent against Turkish lira, nearly 24 percent against Argentine peso, almost 11 percent against Brazil real, more than 7 percent against Russian ruble and around 6 percent against Indian rupee.

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"There is an unhealthy situation in prices".

Emerging markets' local currencies have been weakening against the USA dollar since the beginning of this year. "If policymakers refrain from tightening monetary policy, the risk of a disorderly adjustment and a sharp economic downturn (possibly recession) will mount", he said.

ISTANBUL-Turkey's central bank took emergency action late Wednesday, raising one of its interest rates by 3 percentage points, in a bid to stop the Turkish lira's fall one month from presidential and parliamentary elections.

Turkish President Recep Tayyip Erdogan has referred to high interest rates as "the mother and father of all evils" and is campaigning for re-election on a platform that promises the central bank will provide cheap lending.

The currency has lost 22% of its value in 2018, as fears grow that the government might undermine the powers of Turkey's central bank.

"Comments from the Turkish president raise the possibility that discretionary policymaking and policy predictability will come under pressure after June's elections", the credit rating agency Fitch said in a statement on Tuesday. The side effects of the war in neighboring Syria are also to blame for adversely impacting the Turkish economy.

"Turkey's economy grew 7.4 percent previous year and is still maintaining a growth trend at this level".