By selling foreign currencies on the foreign exchange market, the Turkish central bank is trying to counter the progressive decline in the value of the lira. The intervention was due to "unhealthy price developments" on the market, the currency guardians announced. The lira appreciated by up to 8.5 percent against the dollar after the announcement, only to give way again in hectic trading. At noon, the dollar was again paid more than 13 liras, for a euro around 14.80 liras. That was 3.7 percent less than the previous day. Nevertheless, buyers have to fork out about 50 percent more lira for the dollar and the euro than they did a year ago.

The fact that after seven years the central bank has once again resorted to this means of intervening in the foreign exchange market, which economists consider unsuitable for stabilizing the currency in the long term, shows the dramatic nature of the situation in Turkey.

President Recep Tayyip Erdogan had only on Tuesday evening once again defended his course to fight rising inflation by lowering interest rates. He is pushing for low interest rates because, in his words, they boost growth, create jobs and help the export industry, which is important for foreign currency earnings.

Economists believe this is counterproductive and wrong. Currently, Turkey's key interest rate is 15 percent, down from 19 percent in March. A further cut this month is expected. The official inflation rate, whose validity is doubted by some, is just under 20 percent. Unions are already demanding higher minimum wages because the money is not enough to live on.

On Friday, the inflation rate for November will be announced. Analysts estimated it at more than 20 percent - with further potential for increase in the coming year. One reason is the rising prices for imports such as energy raw materials, also due to the currency decline, but also goods for daily use such as medicines are becoming more expensive. Here, the industry is already warning of shortages, as government-regulated prices may not keep pace with inflation. Recently, Apple had stopped selling iPhones, only to resume them after a few days at prices that were 25 percent higher. Prices for new and used cars are also shooting through the roof.

Tomas Meißner, head of research and financial market strategy at Landesbank Baden-Württemberg, sees the move as an "act of desperation". Raising key interest rates, the means of choice to avert an impending balance-of-payments crisis, would be out of the question with President Erdogan, he said. "The central bank's gold and foreign exchange reserves may have recovered somewhat in the meantime in 2021, but experience shows that these quickly melt away in the event of foreign exchange market interventions," Meißner told the F.A.Z.

In contrast to the crisis of three years ago, the balance of Turkish trade has recently been positive, but the high foreign debt, especially the part denominated in U.S. dollars, poses considerable risks. In the next two years, government bonds in the amount of almost 50 billion dollars are due. Refinancing them has become much more expensive due to the recent, alarming depreciation of the lira, while yields on Turkish government bonds have risen significantly since the start of monetary policy easing in September 2021.

"It is up to Turkey's political leadership to end the self-inflicted crisis," Meissner said. He added that the political leadership must recognize basic economic facts and not continue to negate them. He added that it was to be expected that those responsible at the Turkish central bank would initially continue to loyally implement the will of the Turkish president. "This threatens a further decline of the lira, which may be stopped by the introduction of exchange controls."