Depreciation of Turkish Lira distresses government

When Turkish President Tayyip Erdo?an began a new wave of statement against the Central Bank on Jan. 16, roughly one-and-a-half months ago, one U.S. dollar was worth 2.30 Turkish Liras (TL).

That was already a high figure. While arranging their 2015 budgets at the end of 2014, almost all major companies in Turkey had based their estimates on a yearly average of 2.4 liras to the dollar, relying on government extrapolations. That limit was surpassed by Jan. 30.

There are external factors such as the global appreciation of the dollar, but it is not a coincidence that whenever Erdo?an slams the Central Bank and its governor Erdem Ba?ç? for not lowering interest rates further, or whenever he criticizes Deputy Prime Minister Ali Babacan and Finance Minister Mehmet ?im?ek for not putting more pressure on the supposedly independent institution, the lira loses more value.

Yesterday, March 5, the value of one dollar approached 2.60. That was one of the thresholds for Turkish banks to back their guarantees without additional funding.

But it also means that the actual devaluation of the lira against the dollar over the last one-and-a-half months is nearly 12 percent.

There is more. When the lira depreciated against the dollar from the 1.80s to the 1.90s - roughly 10 kuru? or one-tenth of a lira - during the month-long Gezi protests in June 2013, Erdo?an said the protests had been instigated and manipulated by an international ?interest rate lobby? in order to make the lira less valuable.

Since Gezi, the lira has lost its value versus the U.S. dollar by more than 40 percent. That 40 percent is the same amount as the losses that occurred over a few days in February 2001, which was caused by the largest financial crisis in...