Turkish Lira with a New Record Drop

Turkish lira collapsed by another 5 percent against the dollar on Wednesday, reflecting investors' concerns about President Recep Tayyip Erdogan's controversial monetary policy.

The Turkish central bank is under pressure to hold an extraordinary meeting to raise interest rates ahead of the planned June 7 meeting, but it is undesirable, as Erdogan wants low interest rates.

Higher interest rates can support the currency and boost inflation but also hinder economic growth, making loans more expensive and less profitable, AP reported.

Since the beginning of the year, the Turkish lira has lost 20% of its value against the dollar. The risk is that prices of imported goods can increase, which would lead to an effective impoverishment of Turkish citizens. This could also encourage more investors to withdraw their money if they expect the value of their investments to decline as the currency collapses.