ISTANBUL, April 5 (Reuters) - The Turkish lira weakened to 4.0290 against the dollar on Thursday, nearing the record low after the a report that President Tayyip Erdogan had criticised interest rate policy, the latest in a series of reports on the issue.
The lira stood at 4.0290 against the U.S. dollar at 0705 GMT, near the all-time low of 4.0375 hit two weeks ago.
According to a report in the top-selling Hurriyet newspaper on Thursday, President Tayyip Erdogan had criticised a recent interest rate hike at a closed-door meeting of his ruling AK Party this week.
“Before I went abroad, we had a meeting regarding interest rates. We referred to lowering (them). Then when I was abroad, the central bank raised interest rates,” Erdogan was reported as saying.
“They talk about single-man rule. What sort of single-man rule is this. We take a decision and they don’t implement it. They did it behind my back,” Hurriyet cited him as saying.
No one was immediately available for comment at Erdogan’s office.
It did not say which meeting he was referring to, but Turkey’s central bank last raised rates in December, hiking the highest of the four interest rates it uses to set policy by 50 basis points.
Hurriyet said a day ealier the government has been working on measures to lower interest rates by reducing Treasury’s borrowing requirement and the new model is expected to be announced by Erdogan in a fortnight.
“There have been (reports on) a package to lower interest rates and President Erdogan’s criticism of officials responsible for the economy,” said one banker who declined to be named because of the sensitivity of the subject.
“Today the central bank was dragged into this. Because we do not understand where this process is going, these developments remain a source of concern in the market and impact pricing,” the banker said.
Erdogan, a self-declared enemy of high interest rates, has repeatedly warned the central bank to lower rates, arguing that high rates cause inflation.
The central bank will hold its next rate-setting meeting on April 25. (Additional reporting by Nevzat Devranoglu Writing by Daren Butler Editing by David Dolan)