The Turkish lira plunged to a record low against the dollar this week. Concerns over deteriorating relations with the U.S. and the central bank continue to affect Turkish markets.
What Happened? Turkish President Recep Tayyip Erdogan spoke before the nation twice on Aug. 10, but the country's currency continued its descent, reaching about 6.4 lire per dollar, a decline of about 14.6 percent. At one point during the day, it had fallen more than 20 percent. Meanwhile, new Treasury and Finance Minister Berat Albayrak, also the president's son-in-law, previewed a new economic program for the country. The president — instead of reassuring the markets, whose collapsing confidence is one of the main drivers behind the lira's unprecedented depreciation — slammed Western countries and accused them of waging economic warfare on Turkey. He returned to his familiar refrain of urging Turks to use their reserves of dollars, euros and gold to buy up lire. The markets reacted swiftly, and the lira dropped even further. What Are the Government's Options?
