Dec 2, 2021 - World

Turkey currency crisis: Erdoğan doubles down as central bank scrambles

A scenic spot to exchange currency. Photo: Umit Turhan Coskun/NurPhoto via Getty

Turkey’s central bank is scrambling to prop up the country’s spiraling currency, the lira, as rising prices leave Turks struggling to afford essentials and venting their frustrations with the government.

How it happened: President Recep Tayyip Erdoğan has pressured the central bank to cut interest rates this year even as the lira has lost nearly half its value against the dollar. He has long claimed, in stark contrast to economic orthodoxy, that low rates limit inflation.

Driving the news: He replaced his more mainstream finance minister on Thursday with a loyalist, causing the lira to fall further, and continues to call for additional rate cuts.

The opposition’s call for protests has been heeded in several cities despite the threat of arrests.

  • Polls suggest Erdoğan’s popularity is continuing to fall and that he trails potential opponents like Istanbul Mayor Ekrem Imamoglu in a hypothetical presidential matchup.
  • Yes, but: Turkey isn’t due for elections until June 2023. In the meantime, Erdoğan insisted in a televised address last week that Turkey's unorthodox economic policies won’t change.
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