Turkish Currency Crisis
About Turkish Currency Crisis
The Turkish lira lost 40 percent of its value against the dollar in 2018. The crisis was caused by President Erdogans unorthodox view that high interest rates cause inflation, the opposite of standard economics. Erdogan fired central bank governors who resisted. The lira fell from 3.7 to 18 per dollar by 2021. Inflation reached 85 percent in 2022. Erdogan eventually accepted rate hikes, and the lira stabilized somewhat. The crisis illustrated the economic damage of political interference in monetary policy. Turkeys unconventional approach made it an outlier in global central banking.
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