Turkish President Recep Tayyip Erdogan signaled his intention to exert greater control over monetary policy if he wins snap elections June 24, causing the lira to drop in value along with other emerging-market currencies, The Financial Times reported.
The currency selloff took place after Erdogan said in a London interview with Bloomberg TV that "illegitimate money brokers" were benefiting from high interest rates. The lira subsequently fell 2% against the U.S. dollar. The currency has fallen 15% over the last three months.
The FT said that investors were expecting Erdogan to talk about curbing inflation and the need to allow the central bank to support the lira during his three-day trip to London. Instead, his remarks raised concerns.
Currencies in developing countries fell broadly, mainly attributed to U.S. economic data that showed a strengthening economy, according to the FT. The data prompted a move toward dollar-denominated assets, with the benchmark 10-year U.S. Treasury yield hitting a seven-year high of 3.06%.
The Brazillian real declined nearly 2% while the South African rand fell by 2.5%. The Russian ruble dropped 1.4% before staging a recovery. The JPMorgan benchmark index of emerging-market currencies also dropped 1.4% before a small rally.