Reuters
Analysis – Free-falling lira puts Turkey in balance of payments danger
A big fall in Turkey’s lira is hardly rare these days, but the currency’s precipitous 20% plunge over the last week is ramping up risks of a balance of payments crisis unless authorities can somehow pull the brake. The lira fell 15% at one point on Tuesday alone, ending the day with its largest daily drop since its tumultuous 2018 crisis, and analysts are worried the declines could rumble on. The crux is that the country’s central bank is bowing to political pressure from President Tayyip Erdogan to deliver interest rate cuts despite 20% inflation that could reach 30% or even 50%, economists say, if the lira can’t recover.
