Turkey is experiencing a very unusual currency crisis. The collapse in the value of the lira-by about one-fifth in the past two weeks-was not caused by problems with the country’s economic fundamentals as in the past. The country has suffered a long-term current account deficit due to a sharp increase in exports and a rebound in the number of foreign tourists, with a surplus for the second consecutive month in September. On the contrary, the currency’s problems almost entirely reflect the increasingly unstable decision-making of a man and his influence on the allegedly independent Turkish central bank: President Recep Tayyip Erdogan.

Erdogan blamed external forces for the devaluation of the lira. But the most recent problem started in March of this year when he fired Naci Agbal, the governor of the central bank. This respected technocrat is the third governor to lose his job in two years. The appointment of Erdogan’s allegiance Sahapu Kafchoglu caused the lira to fall by 15% shortly thereafter before it rebounded.Earlier this month, in Central Bank cuts interest rates For the third time in months.

Indeed Emerging market currencies are common This year’s performance against the U.S. dollar has been poor. The expectation that the Fed will soon begin to reduce its asset purchase program aimed at supporting the economy and the financial sector through the coronavirus pandemic has led to the appreciation of the U.S. dollar. Free capital seeking higher interest rates in developing countries is now returning home.As the Governor of the Central Bank of Pakistan said In an interview with the Financial Times last weekIf sentiment changes, poorer countries with high foreign currency debt will be at risk.

In this context, Erdogan’s tendency to spread conspiracy and authoritarianism is worse than usual. Although he has long opposed what he calls an “interest rate lobbyist”, he is also a cunning pragmatist who eventually allowed the central bank to raise interest rates during previous periods of currency fluctuations. This time, he seemed determined to fulfil his ideological commitment to low interest rates and stated at the beginning of last week that Turkey is participating in “Economic independence war“.

The opposition parties are optimistic about Erdogan’s last few years in power, and the elections scheduled for 2023 will end the vicious circle.Erdogan’s popularity is declining Higher prices erodes the standard of livingWhen he was first elected, his Islamic party promised to usher in an era of economic growth and steady income growth. Over the years, he achieved this goal, thanks in part to an International Monetary Fund project inherited by his government, and the construction boom that has since subsided. In fact, the president’s continued support for cheap money may conceal the memory of that era of debt-driven growth. This is just one of the many tools he tries to keep in power.

The legend may have a more unhappy ending. The inflation rate is already running at a rate of 20% per year, which means that the real interest rate is about negative 5%.If the president Continue to pursue a program If interest rates are cut, the lira will fall further and prices will inevitably rise. In this case, the only way for Turks to protect their savings is to use currencies that Erdogan has no control over. Unless he changes course suddenly, the only question facing Turkey, a country with great potential, is how long the president will stay in office — and how much damage he can cause before he leaves.