Erdoğan’s costly move against currency speculators could prove to have major ripple effects
The battle waged by Turkey’s Recep Tayyip Erdoğan against currency speculators is a classic pyrrhic victory. The show of resolve by the self-styled strongman on Wednesday stopped investors from dumping the lira but at enormous cost in both the short and long term. That Turkey will be damaged is beyond question. All that’s in doubt is how severe that damage will be and whether the fallout will be felt elsewhere. Looking at the fragile state of the global economy, there’s every chance it will be.
The backdrop to the latest instalment of a long-running crisis is that Erdoğan is this week facing important local elections at a time when the Turkish economy is in recession. In an attempt to drum up support, Turkey’s president last week condemned Donald Trump’s decision to recognise Israeli control over the Golan heights, but this proved a spectacular own goal by convincing foreign investors that Ankara was on a collision course with Washington. The lira plunged.