How does the measures taken by Erdogan these last two decades impact the lira's exchange rate nowadays?

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[...] In February 2018, Erdoğan ignores recommendation of the IMF which is to raise short-term interest rates. As a result, defaults are accumulating, the current account deficit is growing, and foreign investors are showing no more interest for Turkey. In a nutshell, the economic situation is catastrophic. Between January and August 2018, the lira suffers from a 40% depreciation against the dollar, and almost the same rate against the euro. Political tensions are not helping, Erdoğan reinforces his authoritarian regime and enters into disagreements with big partners such as Germany, France, the Netherlands, and in particular with the United States who as a consequence raise tariffs on Turkish steel and aluminum in August. [...]

[...] This surprising observation can make us wonder what led to such depreciation. The Turkish currency collapse aroused the interest of most economists and the press as it worsened in 2018 and took a turn lately in November 2020 with the new progressive but fragile appreciation of the lira. In this sense, this evolution is very relevant to look at as it is noteworthy. Many factors can explain the fluctuations of the Turkish lira throughout the years, even though most of them are related to politics decisions. [...]

[...] In fact, we can see by comparing the two curves that the fluctuations are more pronounced on this side. A first explanation to such a trend is that in addition to the Erdoğanomics (which will be discussed later), Turkey has witnessed a deterioration of its business environment first because of the burden of the past crises, but also because of scandals of bribery which hit hard the country in 2013, the progressive establishment of an authoritarian regime, the lacks in terms of transparency, justice, independence and stability and the growing political instability that added altogether lead to a distrust from foreign investors regarding to the lira and investing into the country. [...]

[...] How does the measures taken by Erdoğan these last two decades impact the lira's exchange rate nowadays? Turkey began the new millennium in 2000 with the most severe economic crisis of its history. This crisis, which followed the currency crisis of 1994, had a strong impact on the Turkish financial system, as it led to a fall in capital inflows coming from foreign investors. This striking event is the source of a complex restructuration of the banking system which took part throughout the two decades following the crisis. [...]

[...] Some improvements have been made, but Erdoğan remains reluctant when it comes to raise interest rates and overall the lira continued to weaken. In September 2020, interest rates were slightly raised but it was truly insufficient to face the growing inflation established at 12%. In October, investors were expecting a new raise, much more consequent, but nothing was done, thus the lira continued to depreciate beating all former records as 1 lira was equal to $ Fortunately, at the end of November, new reforms are finally implemented, Erdoğanomics are partially left out. [...]