With snap presidential and parliamentary polls only a month away, Turkey is grappling with currency turmoil that has stoked apprehension over Ankara’s ability to contain its growing economic woes. Not so long ago, in 2007, the dollar was worth 1.3 Turkish liras. This a far cry from where the lira has sunk in recent weeks as the central bank watched from the sidelines, restrained by a president averse to raising interest rates. On May 23, the lira plunged to a historic low of 4.92 against the dollar, losing as much as 5% in value, before the central bank finally hiked rates in an emergency move to salvage the currency and calm investors. Yet, given the confidence crisis gripping the markets, the price of the dollar might well break the psychological barrier of 5 liras before the June 24 elections.
How did the problem snowball to that point?