Turkey stumbles into unknown as lira crashes

Turkey is stumbling into the unknown.

It's lira currency has crashed, down almost a fifth since the beginning of last week alone.

That has helped drive inflation to around 20%, leaving many ordinary Turks wondering how they will make ends meet.

An Istanbul hairdresser sums up the pain for small firms:

"An 800 lira electricity bill came to the shop. I'm sitting with the lights off, no customers. I even close the shop at night without making one sale a day, but the bill is 800 lira. It is impossible not to go crazy."

The lira did steady on Wednesday (November 24), after a 15% crash to record lows the day before.

But it remains under pressure as President Tayyip Erdogan insists on rate cuts despite the rising inflation.

Defying economic theory, he says lowering rates will boost investment without fuelling runaway prices.

Financial analyst Tunc Satiroglu says the turmoil leaves savers rushing for safety:

"We are seeing extreme volatility because we have the perfect recipe for extreme volatility. Those ordinary citizens, who fear that their money is going to lose value, prefer U.S. dollars instead of Turkish lira."

Economists have called on Erdogan to change course, but to no avail.

The central bank has instead hinted at more rate cuts to come.

It all leaves households counting their cash, and reining in plans for future spending.

The lira's crash is its worst since a currency crisis in 2018 that led to a sharp recession and years of sub-par growth.

Turks will hope that history isn't about to repeat itself.

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