Turkey’s currency plummeted after Erdogan defied critics and doubled down on his mania for low interest rates
Turkish lira crashes on inflation fears
Turkey’s lira had its second worst day ever on Tuesday (November 23) as it plunged 15% before recovering some ground.The lira hit record lows against the U.S. dollar for an 11th straight session.Turkey’s currency has lost 45% of its value this year and fallen just over a quarter since the start of last week.That as inflation soars close to 20%. One minibus driver in Diyarbakir described the cost rises he has witnessed.”A bag of flour was 100 lira and it is now 300 lira. What can people do? People are really depressed. People are looking abroad for jobs.”President Tayyip Erdogan has put pressure on the central bank to move towards an aggressive easing cycle.His aim is to boost exports, investment and jobs – even as inflation soars and the currency’s depreciation speeds up.Former central bank deputy governor Semih Tumen – who was dismissed last month – has called it an irrational experiment with no chance of success. Other economists have called the rate cuts reckless, and said Turkey should change course.Tuesday’s slide was the lira’s worst since the 2018 currency crisis, which led to a sharp recession.The central bank last week cut rates, and signaled there was more easing to come. Contrary to standard economic theory, Erdogan insists that high rates aren’t needed to tame inflation.