The Turkish lira went into freefall at one point on Tuesday, as it hovered at fresh lows against the U.S. dollar after President Tayyip Erdogan vowed his country would win an “economic war of indepedence.”
fell more than 9% to 12.48 against the dollar, but at its worst, traded at 13.49 on the day.
The selling came after Erdogan on Monday reportedly framed Turkey’s weak currency as competitive, saying it would usher in jobs and growth.
“We see the games being played on the exchange rate and interest rates. We came out of every struggle we entered honorably by taking a strong stance. With the help of Allah and the support of our nation, we will emerge from this economic war of independence with victory,” he said.
Some of the selling eased amid media reports that Erdogan had met with the central bank chief Central Bank Governor Sahap Kavcioglu.
The lira has tumbled 63% so far this year, as Erdogan has pressured the central bank to keep cutting interest rates and the country’s inflation rate officially hovers around 20%, though independent economists see it as more than double that. Turkey’s central bank last week cut its policy rate by 100 basis points to 15%, bringing cuts since September to a total of 400 basis points.
Jens Nordvig, economist and founder of ExanteData questioned on Twitter questioned whether Erdogan can hang on as the country’s economic crisis deepens
“Normally, this is the time when you say that extraordinary measures like currency intervention are warranted. But it’s unclear that Turkey has any meaningful liquid reserves to use for this purpose. (they could hike rates of course…),” he added on Twitter.