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The storm of political protest in Ankara was to be expected.
After US President Joe Biden recognized the mass murders of Armenians in the Ottoman Empire as genocide on Saturday, the Turkish government foamed.
But the process has another consequence, which is ultimately far more important for the people of Turkey: their currency crashes again.
When it became known last week what Biden was planning, the lira tumbled.
This week it continues unabated.
However, the conflict with the USA is only an additional driver.
The real problem with the Turkish currency lies in President Erdogan's volatile policy.
In the past five years he has managed to destroy all trust in the lira.
This is now taking its toll and has sometimes bizarre consequences.
At the end of last week, the value of the lira fell below 0.10 cents, or vice versa: Since then, one euro has cost more than ten lira.
And on Monday the Turkish currency continued to decline, the rate temporarily rising to 10.25 lira per euro.
Five weeks ago it was 8.60 lira.
Source: WORLD infographic
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Back then, on March 20, Erdogan dealt the currency another hard blow when he fired the head of the central bank, Naci Ağbal.
The lira then lost around ten percent of its value within days.
Because Ağbal was considered a guarantor of stability.
He had only come into office in November and he had vigorously turned things around.
His predecessor had drastically cut interest rates at Erdogan's behest, despite the ever faster price spiral.
Ağbal, on the other hand, increased interest rates again, in several steps from 10.25 to 19 percent.
However, the last adjustment from 17 to 19 percent, two days before his dismissal, seems to have annoyed Erdogan so much that he dismissed the central bank chief after just five months in office.
Because while practically all economists are convinced that inflation can only be contained by a scarcity of money, i.e. through higher interest rates, the Turkish President sees it very differently.
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"According to Erdogan's dubious view, high key interest rates are not only a burden for the economy, but also the cause of excessive price pressure," says Sören Hettler, foreign exchange expert at DZ Bank.
So Erdogan believes that high interest rates cause inflation, and lowering them will make them go away.
Unfortunately, the opposite has been proven time and again in Turkey over the past five years.
Whenever interest rates were too low, the value of the currency collapsed; whenever interest rates were raised, it stabilized again.
But of course higher interest rates threaten to disrupt economic growth, and Erdogan wants to prevent that at all costs.
In March, he replaced Naci Ağbal at the head of the central bank with Şahap Kavcıoğlu.
"The order to Kavcıoğlu is pretty straightforward," says Hettler.
“He should lower the key interest rate as quickly and extensively as possible.” And since this is exactly what most investors fear, they have reacted in the past few weeks.
Source: WORLD infographic
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According to the central bank, foreign investors have sold Turkish stocks and bonds with a net equivalent of around 2.4 billion dollars since March 20, i.e. they have fled Turkey.
But the Turks themselves no longer trust their currency either.
So they try to save their money in different ways.
Some exchange their lira for bitcoin or other cryptocurrencies.
But this apparently took advantage of fraudsters.
The crypto trading platform Vebitcoin has just filed for bankruptcy.
In mid-April, the operator of the country's largest platform had fled abroad, and according to media reports, digital coins worth between 500 million and two billion dollars disappeared with him.
However, the majority of Turks shift their money into other currencies, mostly dollars.
"The proportion of bank balances in foreign currency has risen to 52.3 percent," says Phoenix Kalen, emerging market expert at Société Générale.
Ten years ago the proportion was half as high.
She is now talking of a dollarization of Turkey, i.e. a creeping replacement of the domestic currency by the dollar in people's everyday life.
“We fear that dollarization will intensify in the coming months if those responsible in Turkey fail to restore confidence in the value of the Turkish lira,” she says.
Because Turkey lacks an independent central bank that operates a monetary policy that is based on the classic understanding of the economy.
Kavcıoğlu has so far not really managed to regain this trust.
He had countless conversations with analysts and investors, gave interviews, for example, with the financial news channel Bloomberg and emphasized that his policy was to contain inflation.
That slowed the currency down a bit, but it hasn't stopped it so far.
And now there is the political conflict with the USA.
Kavcıoğlu's problem is also that Turkey no longer has any foreign exchange reserves.
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His predecessor in office, Murat Uysal, had apparently fired this, in coordination with the then Finance Minister Berat Albayrak, Erdogan's son-in-law.
Around 128 billion dollars are said to have been thrown on the market to stop the currency from falling.
But since interest rates were kept far too low at the same time, it was in vain.
The opposition party CHP has made this an issue in recent weeks, demanding clarification under the slogan “Where are the 128 billion?” Because the central bank refuses to provide information about its foreign exchange transactions.
Erdogan initially responded by threatening libel suit anyone who broached the issue of the disappearance of money.
Posters asking for the 128 billion were banned.
The opposition did not give in, however, they now demanded - in order to circumvent the threat of punishment - clarification about "half of 256", and meanwhile there are new official statements almost every day as to what could have happened to the money, but without this clarification would prevail.
But one thing is quite certain: it is gone.
This leaves Kavcıoğlu interest rates as the only means of getting inflation under control.
And at least so far the fear has not arisen that he will lower interest rates.
However, it cannot be ruled out that this will happen at the next central bank meeting on May 6th.
Because the statement on future politics, which was published after the last meeting, was formulated much more mildly than under its predecessor.
But with an inflation rate of currently over 16 percent, a rate cut would be devastating, especially since the rate is likely to rise.
Phoenix Kalen reckons that raw material prices in particular will ensure that the upward trend in prices will accelerate.
Because raw materials have not only become more expensive, they are also quoted in dollars.
And since its value in relation to the lira has risen dramatically, the higher raw material prices in Turkey have a double effect.
Source: WORLD infographic
Against this background, a rate cut by the new head of the central bank, Kavcıoğlu, would be fatal for the Turkish currency.
"If it goes just one centimeter lower, the lira will be severely punished," says Ipek Ozkardeskaya, an analyst at the broker Swissquote.
"And he knows that."
However, it can be assumed that all predecessors knew this about him, and yet some of them bowed to Erdogan's orders and acted against their better judgment.
"If monetary policy should once again orientate itself towards Erdogan's specifications and the real key interest rate should be lowered again into negative territory, the recent depreciation of the lira is likely to have only been the beginning of a renewed period of weakness in the national currency," says Sören Hettler.
Erdogan alone has it in his hands whether the lira stabilizes or the total crash follows.
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