The lira slid to a record low in volatile trading after President Recep Tayyip Erdoğan predicted a decrease in interest rates and a stronger currency.

The lira fell to 4.98 per dollar early on Thursday, adding to losses of almost 5 percent the previous day. It bounced back to rise 0.4 percent to 4.86 by 5:27 p.m. in Istanbul. Losses this year total 23 percent.

The embattled currency is the worst performer in major emerging markets in 2018 after the Argentinian peso, which the government in Buenos Aires has propped up with an International Monetary Fund programme. Erdoğan’s call for lower interest rates and his appointment of his son-in-law to manage the economy under a strengthened presidency this week has spooked investors who point to inflation of 15.4 percent and a gaping current account deficit as evidence that the economy is overheating.

The central bank has raised its benchmark rate by 425 basis points to 17.75 percent since May, when Erdoğan first said he would lower rates and take more control over monetary policy should he win a new term in office on June 24. He emerged victorious from the election with 52 percent of the vote and has now tightened his grip on management of the economy by appointing Berat Albayrak, the husband of his daughter Esra, to head the Treasury and Finance Ministry. He also issued a decree giving himself direct authority to appoint the central bank chief and his deputies.

Erdoğan repeated his call for a reduction in interest rates on Wednesday, saying non-government banks as well as state-run enterprises should be ready to reduce loan costs. Central bank policymakers are next due to meet on rates on July 24. Most economists are expecting a substantial hike after inflation surged to the highest level since 2003.

Investors, concerned by Erdoğan’s insistence on pro-growth economic policies despite a sell-off this year in emerging markets, have begun talking about a possible IMF standby accord for Turkey, which would be its 20th agreement with the fund. They point to the current account deficit, which has widened to 6.5 percent of GDP, and the central bank’s net reserves of less than $30 billion. Data on Wednesday showed the deficit widening to 6.5 percent of GDP, well above levels found in other large developing countries.

Also on Wednesday, Erdoğan said he was certain the lira would strengthen against the dollar and that his decisions on the economy would not be dictated by the foreign media.

Observers of Turkey were left stunned on Monday night after Erdoğan appointed Albayrak, his former energy minister, to head his economic team. Mehmet Şimşek, the respected Merrill Lynch economist who was deputy prime minister in charge of the economy, was not given a position in Erdoğan’s new cabinet. Nor was ex-Finance Minister Naci Agbal, another investor favourite.

“With Şimşek and Agbal gone there is now no one left to communicate with the market - Albayrak needs to figure out ASAP that this should be his role,” said Tim Ash, senior emerging markets strategist at Blue Bay Asset Management in London.

Following his re-election on June 24, Erdoğan took over the remaining executive functions of the state in a new, enhanced presidential system of government. The position of prime minister was abolished in a constitutional change narrowly approved in a referendum in April 2017.

The concern is Albayrak does not have the credentials to steer the economy. His tenure as energy minister saw power companies run up billions of dollars in debts as they borrowed cash to fund buyouts and expansion. Government caps on energy prices also eroded their bottom lines. Some firms, including Bereket Enerji, a power company, are now applying to banks to re-negotiate their loans and are seeking buyers for their assets.

Erdoğan also appointed Mustafa Varank, a close personal adviser who oversaw a pro-government social media team on Twitter and elsewhere, as industry minister, the other key economy portfolio.

Banks in Turkey are running low on financing for new lending as non-performing loans rise and companies look to renegotiate the terms of more than $220 billion in net foreign currency loans, mostly sourced locally.

Yildiz Holding, the maker of Godiva chocolates, is among other Turkish corporations that have applied to banks to refinance their borrowing. Turk Telekom, the country’s biggest phone company, was taken over by several local and foreign banks last week, after its owner, Saudi Oger, failed to repay billions of dollars in debt.

(Updates with latest lira price in second paragraph.)