Turkey’s Lira’s has charged back from record lows at breakneck speed, seeing wild swings after President Recep Tayyip Erdogan revealed a plan to support the battered currency and protect local deposits against market moves.
The Lira’s hit a day high of 11.0935 per dollar in early trading Tuesday, but later pared some gains to trade at 12.8373 around 11 a.m. ET. It marks a dramatic improvement from a record low of more-than 18 to the U.S. currency hit Monday before the president’s announcement
It’s an unconventional approach chosen by a president with unconventional economic beliefs: Erdogan has long railed against interest rates, calling them the “mother of all evil” and insisting that increased rates cause inflation, rather than cool it down.His longtime refusal to raise rates and apparent control over central bank monetary policy has played a large part in the Lira’s historic plummet that’s seen it go from less than 4 to the dollar in 2018 to 18 to the dollar this week. Inflation in Turkey currently sits at 21%.