The Turkish currency, which is multiplying downward records, collapsed again on Tuesday to a historically low level, to nearly 13 pounds to the dollar, pushing the country further into crisis.
In the afternoon, the Turkish currency had even gone through hell, losing 15% and briefly surpassing 13.45 pounds against the greenback.
This is the most violent daily drop since August 10, 2018.
This new record comes in the wake of statements by President Recep Tayyip Erdogan saying that he would not change his monetary policy and would continue to “resist pressure” from those urging him to raise interest rates.
Monday evening, after a government meeting, he even denounced a “plot” against the Turkish economy.
“We see the game of some with the exchange rate, currencies, interest rates, price increases,” he said.
These new declarations have pushed the currency a little further, while the cost of living is hardly sustainable for a large part of the population who is trying to save the little that they have in gold, in order to counter the inflation which is reaching. , officially, nearly 20% since the beginning of the year.
For the Turkish employee, the net minimum wage rose from $ 380 in January to $ 224 on Tuesday at the daily rate.
Last Thursday, the central bank lowered its key rate again – for the third time in less than two months – from 16% to 15%, as desired by the head of state, who continues to express his hostility to rates high interest rates, which he sees – against all financial orthodoxy – as a brake on growth.
For Timothy Ash, analyst at BlueBay Asset Management, a specialist in Turkey, the president “Erdogan has lost control. Zero governance, zero credibility. There is no more Central Bank in charge.”
President Erdogan, whose popularity is at its lowest after 19 years in power, seems to be betting on economic growth at all costs in view of a possible re-election in 2023.
– lack of independence –
But its much-criticized monetary policy and the lack of independence of the central bank regularly cause the currency to fall, which almost daily reaches new records lower against the dollar, increasing the cost of imports.
“There is a reason central banks are independent and this is what happens when the gap is crossed. A perfect monetary storm, motivated by policy, complete disregard for inflation and for other central banks adopting a more sensible approach, “commented in London for AFP Craig Erlam, analyst for the Oanda investment platform.
For him, “we will have to take drastic measures to change things now”, under penalty of seeing them “worsen and the pressure become unbearable”.
“As long as I am in this position, I will continue my fight against interest rates”, had nevertheless reaffirmed the Head of State last week before Parliament, even invoking the ban on usury in the Koran, while some economists called for raising the key interest rate.
Raising interest rates is one of the main instruments for fighting inflation.
In a statement on Tuesday evening, the Central Bank of Turkey defended its position, saying that “exchange rates are determined by the conditions of supply and demand according to the dynamics of the free market. The Central Bank cannot intervene. , under certain conditions, only in the event of excessive volatility and without aiming for a constant direction “.
Finally, it denounces, “the appearance, on the foreign exchange markets, of unhealthy, unrealistic price formations completely detached from economic fundamentals”.
Since 2019, Recep Tayyip Erdogan has sacked three central bank governors who opposed his outlook, undermining investor confidence.