Turkish lira in historic 15% crash after Erdogan stokes fire sale

ISTANBUL, (Reuters) - Turkey's lira nosedived more than 15% yesterday 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 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.

Erdogan has applied pressure on the central bank to pivot to an aggressive easing cycle https://www.reuters.com/markets/europe/erdogansrisky-experiment-heal-turkeys-economy-2021-11-23 that aims, he says, to boost exports, investment and jobs even as inflation soars to near 20% and the currency depreciation accelerates, eating deeply into Turks' earnings.

Many economists called the rate cuts reckless while opposition politicians appealed for immediate elections. Turks told Reuters https://www.reuters.com/markets/europe/lira-collapseleaves-turks-bewildered-opposition-angry-2021-11-23 the dizzying currency collapse was upending their household budgets and plans for the future.

After a meeting between Erdogan and central bank Governor Sahap Kavcioglu, the bank issued a statement saying the selloff was "unrealistic and completely detached" from economic fundamentals.

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".

Former bank deputy governor Semih Tumen, who was dismissed last month in the latest round of Erdogan's rapid leadership overhaul, called for an immediate return to policies which protect the lira's value.