Turkey’s lira nosedived more than 15% on Tuesday after President Tayyip Erdogan defended recent rate cuts and vowed to win his “economic war of independence”, despite widespread criticism and pleas to reverse course.
The lira tumbled as far as 13.45 to the dollar, plumbing record lows here for an 11th straight session, before trimming some of those losses to close 10.2% lower at 12.7015. It has lost 42% of its value this year, including a more than 22% decline since the beginning of last week.
According to Bloomberg, the lira's 11-day losing streak is now the longest in 20 years, and in November alone, it's lost almost a third of its value.
Erdogan has applied pressure on the central bank to pivot to an aggressive easing cycle here that aims, he says, to boost exports, investment and jobs - even as inflation soars to near 20% and the currency depreciation accelerates.
There was no hint at an intervention to stem the meltdown. The central bank said it could only do so under certain conditions in “excessive volatility”.
Tuesday's slide was the lira's largest since the height of a currency crisis in 2018 that led to a sharp recession, and brought on three years of sub-par economic growth and double-digit inflation.
The central bank has slashed rates by a total of 400 points since September, leaving real yields deeply negative as virtually all other central banks have begun tightening against rising inflation, or are preparing to do so, Reuters reported.
In a statement Tuesday evening, Turkey’s central bank emphasized that it did not control currency exchange rates. The bank said the statement was necessary to “warn our companies and citizens against possible losses in extremely volatile market conditions trading at values that are completely far from economic fundamentals.”
Yesterday, protesters have taken to the streets of Ankara and other Turkish cities after the lira tumbled 15% against the US dollar.
Apple temporarily suspended sales of its devices in Turkey as the country's economic crisis intensified on Tuesday morning, due to the economic crisis in the country.
