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Turkish currency hits record low after central bank decides against hiking rates in support

Turkey's Prime Minister Recep Tayyip Erdogan addresses the media, after a meeting at the European Council building in Brussels, Tuesday, Jan. 21, 2014. Erdogan is on a two-day visit to meet with various EU officials. (AP Photo/Yves Logghe)

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Turkey's Prime Minister Recep Tayyip Erdogan addresses the media, after a meeting at the European Council building in Brussels, Tuesday, Jan. 21, 2014. Erdogan is on a two-day visit to meet with various EU officials. (AP Photo/Yves Logghe)

ANKARA, Turkey - Turkey's currency, the lira, has fallen to a record low after the central bank decided against supporting it with an interest rate increase.

The lira has dropped recently amid concern that a bribery scandal might destabilize the government. The drop risks causing a spike in inflation, which the central bank is tasked with keeping low.

But the central bank on Tuesday kept the overnight rate at 7.75 per cent, a decision some analysts said was taken under pressure from the government.

The bank is an independent body but the move came a day after Economy Minister Nihat Zeybekci warned a hike would have a "lasting cost" on the economy.

Prime Minister Recep Tayyip Erdogan said the central bank's decision was "right."

The lira dropped to 2.25 against the dollar.

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