Turkey goes from bad to worse

Turkey “appears closer to a full-blown currency crisis than at any point since the ruling AK party took power in 2002”, says the Financial Times. The lira keeps plumbing new lows against the US dollar; it has lost 10% since the start of 2017.

The problem is largely self-inflicted. Turkey’s increasingly authoritarian president, Recep Tayyip Erdogan, “threatens the basic functioning of Turkey’s institutions”. His crackdown following a coup attempt in July has unsettled investors and local businesses. Terrorist attacks have undermined crucial tourism receipts and the sliding currency is increasing the burden of local firms’ foreign debts.

In these circumstances the central bank would normally raise interest rates to stabilise the currency, but because Erdogan has constantly bullied it to keep monetary policy loose in recent years, it may not be able to act. Erdogan prefers to blame such problems on a “nefarious conspiracy of international financiers”.