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Turkish lira drifts off record low; Erdogan defends policy rate

·1-min read

ISTANBUL, Nov 23 (Reuters) - Turkey's lira recouped losses to trade steady on Tuesday after touching a record low in the previous session when President Tayyip Erdogan defended recent sharp cuts in interest rates and vowed to succeed in his "economic war of independence".

The lira was quoted at 11.4014-11.4114 to the dollar at 0500 GMT, having logged record lows for a tenth straight session on Monday when it closed at 11.4000. The unit has lost a third of its value this year.

Analysts said emergency rate hikes would be needed soon, while speculation about a cabinet overhaul and data showing a new low in consumer confidence also weighed.

Under pressure from Erdogan, the central bank cut its policy rate last Thursday by 100 basis points to 15%, well-below inflation of nearly 20%, and signalled further easing.

Erdogan defended the policy in a news conference late on Monday and said tighter monetary policy would not lower inflation.

"I reject policies that will contract our country, weaken it, condemn our people to unemployment, hunger and poverty," Erdogan said after a cabinet meeting.

The central bank has now slashed rates by 400 basis points since September in what many analysts say is a risky policy mistake. Societe Generale said it would need to deliver an "emergency" hike as soon as next month. (Reporting by Daren Butler; Editing by Sherry Jacob-Phillips)