, Turkey’s central bank raised interest rates to check rising inflation. The Turkish lira strengthened against the dollar after the central bank hiked the interest rate by almost 7 percent.
This year has been a tumultuous year for the lira, with the Turkish
currency falling by over 66 percent against the dollar. These ups and downs align with the dizzying year other emerging currency markets are having. In the Turkish case, macroeconomic mismanagement by the newly reelected Erdogan and diplomatic flare ups
with the U.S. pushed the state of the currency from bad to worse.
While the Turkish economy is not a large player in the global scene, the European Union is particularly vulnerable to economic turmoil within its borders as Spanish, Italian, and French banks have a total of $150 billion in Turkish loans.