ISTANBUL: Turkey’s currency sank to all-time lows on Wednesday after President Tayyip Erdogan said he had urged the central bank’s governor to cut interest rates in the next two months despite rising inflation, in the latest blow to the bank’s credibility.

The lira - by far the worst performer in emerging markets this year largely due to perceived political interference in monetary policy - fell by some 4% in early trade to 8.88 versus the dollar before recouping most of its losses.

On a previously scheduled call with investors on Wednesday, Central Bank Governor Sahap Kavcioglu sought to ease concerns over premature policy easing, saying they were “unjustified”.

Yet after Turkey’s president abruptly fired three bank chiefs in two years, many analysts say that Erdogan and not Kavcioglu ultimately calls the shots on interest rates. The currency was down less than 1% at 8.595 against the dollar at 11:53 GMT, slightly encouraged by Kavcioglu’s comments.