According to the New York Times, Turkey came to face a monetary crisis on Tuesday "as the pound fell and the country's central bank seemed to run out of 'ammunition' to stop falling to historic lows".
In fact, in recent days the exchange rate of Turkish lira - euro has reached record levels (1 euro = over 8,1 Turkish pounds). The NY Times points out that these prices appeared only in the 2018 currency crisis.
The situation on the "front" of the Turkish pound against the dollar is similar - but slightly more manageable. The New York Times reports that Recep Tayyip Erdogan sought to address the economic consequences of the pandemic by encouraging banks to increase lending and pushing the central bank to keep the benchmark interest rate below inflation.
"These policies have sparked fears of a credit bubble, prompting investors to sell Turkish assets and lowering the value of the pound against other currencies," the New York Times reported.
In a related report, Bloomberg reported that in the last 12 months more than 12 billion dollars have gone from bonds in domestic currency and the stock market.
The NY Times columnist points out that Erdogan survived the monetary crises of 2014 and 2018, refuting the predictions of an economic collapse that would threaten his stay in power. But the pandemic makes this mission more difficult than ever before, say the NY Times.
The economy is "just a shock away from a crisis," commented Maya Senusio, an economist at Oxford Economics.