Turkish lira falls to a new record low while Erdogan chooses his government ministers

The Turkish lira fell more than 1 percent to a new record low on Tuesday, while President Recep Tayyip Erdogan was choosing who would run economic policies in his government after winning Sunday’s re-election.

The lira recorded an all-time low of 20.34 against the dollar, down from the closing level it recorded on Monday at 20.0990 pounds per dollar. Monday saw the currency’s worst daily performance in eight months.

The lira has lost 8 percent of its value since the beginning of the year. It has lost more than 90 percent of its value over the past decade, following bouts of hyperinflation.

Inflation last year reached its highest level in 24 years, exceeding 85 percent, in light of the rise in prices as a result of unconventional monetary policies adopted by Erdogan, represented in lowering interest rates despite the high inflation.

Investors’ attention is now focused on whether Erdogan will continue with these policies or choose to adopt traditional policies after an internal team in the ruling party has developed alternatives in recent weeks.

After a currency crisis in 2021, the Turkish authorities played an increasing role in the exchange markets. Daily movements have become unusually limited, and foreign exchange and gold reserves have plummeted.