Turkey is a nation transfixed by digital currency rate boards. As the Turkish lira continued its accelerated slide against the dollar, currency traders at the open-outcry exchange outside the Grand Bazaar in Istanbul paused business today. Economists warn of a full-blown currency crunch, yet the Central Bank has barely blinked. In what some analysts shrugged off as too little, too late, the Central Bank sharply increased one of its primary lending rates — the late liquidity window — from 13.5% to 16.5%. The lira briefly rallied, rising to 4.59 against the dollar, only to tumble anew to 4.67. It remains unclear whether President Recep Tayyip Erdogan, who clings to the unusual theory that raising interest rates will increase inflation, gave his blessing to the rate hike or not. 

The lira has been in free fall ever since Erdogan's May 14 interview with Bloomberg Television. “Of course our Central Bank is independent,” he said. “But the Central Bank can’t take this independence and set aside signals given by the president.” The lira hasn’t stopped falling ever since, adding pressure to a bulging current account deficit and dollar-denominated corporate debt. Erdogan’s unremitting assault on democratic checks and balances twinned with the US Federal Reserve’s rate hikes haven’t helped.

Garo Paylan, a lawmaker for the opposition Peoples’ Democratic Party, summed up the situation in an acerbic tweet: “The dollar has hit five Turkish liras, the flames have engulfed the chimney stack. There is a fire. But the fire brigade is saying 'we’ll intervene when appropriate.'”

The former businessman was alluding to comments by Economy Minister Nihat Zeybekci, who asserted, “Our relevant institutions possess the authority and instruments to ensure that the success of the real sector and the toil of the working class don’t go to waste. … Our confidence is absolute that they will assume responsibility and take the right steps at the appropriate time.”