Even before the coronavirus pandemic, the Turkish lira was really weak. Over the last few years, the currency has been hitting new record lows one after another. The main reason for that is the monetary policy implemented by President Recep Erdogan who believes that he is a born financier.

Of course, the coronavirus outbreak has led to a faster drop in the lira. Since the beginning of the year, the Turkish national currency nosedived by 20% against the US dollar trading at 7.5 lira for one US dollar. Three years ago, the exchange rate was twice lower. However, Recep Erdoğan managed to devalue the national currency by more than twice to 7.7 from 3.5 lira for a US dollar. Notably, 7.5 is a psychological level for the lira. A break of this level is a strong signal of a further slump. Economists suppose that the lira may break the level of 8 lira for a US dollar in the near future. Not so long ago, such forecasts seemed astounding. “Foreign capital continues to exit Turkey with no new money coming," Yalcin Karatepe, a scholar and economist from Ankara University, said. "A new wave of hikes in prices is coming, and the unemployment rate will further rise," he added. 

At the same time, the US Fed is trying to boost the greenback. Thus, the regulator has decided to keep the key interest rate at the same level. Under the current conditions, this could be considered as a monetary policy tightening. Turkey has also reported on a mounting number of new virus cases that poses threat to the country’s economy and makes the authorities implement new restrictive measures.