Turkish lira still in freefall

Turkey´s lira went into freefall on Tuesday after the country´s President said the country was fighting an "economic war of independence".

Recep Tayyip Erdogan made the remarks in response to criticism of the central bank's recent interest rate cuts even in the face of consumer price inflation that was already running near 20%.

As of 1547 GMT, the currency was 12.24% lower against the US dollar at 12.7789, having earlier fallen as low as 13.4539.

Over the preceding 12 months it had now lost more than half its value against the greenback, having traded at approximately 5.6 against one year ago.

In mid-2017 the lira had traded at around 3.5 to the US dollar.

As recently as 18 November, the Central Bank of Turkey had slashed interest rates by 100 basis points to 15.0%, which nevertheless left them very deeply in negative territory when adjusted for inflation.

In the past Erdogan had repeatedly labelled interest rates "the enemy", going as far as to sack three central bank governors over the course of the last two years.

"With the Turkish lira down by 9% so far today and 20% over the past week, the currency is now firmly in crisis territory," said Capital Economics senior global economist Simon MacAdam.

"Higher inflation and tighter domestic financial conditions are likely to sap Turkey's recovery. But given the small trade and financial links with the rest of the world, and that most EM external positions are in better shape than in the past, there are unlikely to be significant global spillovers."