Investing.com – The Turkish lira was the weakest performer among emerging market currencies on Monday. This came in response to President Recep Tayyip Erdogan’s recent comments on interest rates, which raised concerns about a potential return to his previously unconventional monetary policy.

The lira fell by 0.6% against the dollar, which translated into a year-to-date depreciation of around 16%. By comparison, the MSCI EM currency index was largely unchanged on Monday, and is only slightly red in 2024.

President Erdogan in his statement indicated that interest rates will be significantly reduced next year. He added that “2025 will be a breakthrough year in this respect.” The comment followed the Turkish central bank’s first interest rate cut since 2023.

Despite officials’ warnings of a continuing cycle of monetary easing, analysts are now predicting interest rate cuts at every policy meeting in 2025.

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