The Turkish lira was in free fall at one point on Tuesday, as it wobbled to a new low against the US dollar after President Tayyip Erdogan announced that his country would win the ” unwarranted economic war”.
fell more than 9% to 12.48 against the dollar, but at its worst, was trading at 13.49 on the day.
The sale comes after Erdogan on Monday Reportedly framed Turkey’s weak currency is competitive, saying it will open up jobs and growth.
“We see games being played based on exchange rates and interest rates. We walk out of every struggle we enter honorably by taking a firm stand. With the help of Allah and the support of our nation, we will win this battle for economic independence,” he said.
Some selling has eased amid media reports that Erdogan has met with Central Bank Chief, Central Bank Governor Sahap Kavcioglu.
The lira is down 63% so far this year, as Erdogan has pressured the central bank to continue cutting interest rates and the country’s inflation rate officially hovers around 20%, despite the Independent economists think this number is more than double. Turkey’s central bank last week cut its policy rate by 100 basis points to 15%, bringing the cuts since September to a total of 400 basis points.
Jens Nordvig, economist and founder of ExanteData, took to Twitter to question whether Erdogan can continue as the country’s economic crisis deepens.
“Usually, this is where you say extraordinary measures like currency intervention are warranted. But it is not clear if Turkey has any significant liquid reserves to use for this purpose. (Of course they can raise rates…),” he added on Twitter.
https://www.marketwatch.com/story/turkish-lira-fights-against-freefall-after-erdogan-vows-to-win-economic-war-of-independence-11637677388?rss=1&siteid=rss Turkish lira fights back against liberal collapse after Erdogan vows to win ‘economic war for independence’