The lira tumbled to as low as 13.45 to the dollar, plumbing record troughs for an 11th straight session. It has lost 45% of its value this year, including a near 26% decline since the beginning of last week.
Erdogan has applied pressure on the central bank to pivot to an aggressive easing cycle that aims, he says, to boost exports, investment and jobs — even as inflation soars to near 20% and the currency depreciation accelerates, eating deeply into Turks' earnings.
Many economists called the rate cuts reckless and urged a reversal, while opposition politicians appealed for early elections. Turks told Reuters the dizzying currency collapse was upending their household budgets and plans for the future.
Former central bank deputy governor Semih Tumen, who was dismissed last month in the latest of Erdogan's rapid leadership overhaul, called for an immediate return to policies which protect the lira's value.
"This irrational experiment which has no chance of success must be abandoned immediately and we must return to quality policies which protect the Turkish lira's value and the prosperity of the Turkish people," he said on Twitter.
Tuesday's slide was the lira's worst since the height of a currency crisis in 2018 that led to a sharp recession and following years of sub-par economic growth and double-digit inflation.
Though the lira pared some losses, when it was worth 12.7 to the dollar, the last 11 days of losses has been its worst run since 1999.
The central bank has slashed rates by a total of 400 points since September, leaving real yields deeply negative as virtually all other central banks have begun tightening, or are preparing to do so.
The lira has been by far the worst performer globally this year due mostly to what some analysts have called a premature economic "experiment" by the president who has ruled Turkey for nearly two decades.
Erdogan's ruling AK Party is sliding in opinion polls ahead of elections scheduled for no later than mid-2023, reflecting sharply higher costs of living.
"Prices are rising too fast. I don't want to buy certain products because they've got too expensive," said Kaan Acar, 28, a hotel executive in southern Turkey's Kalkan resort, adding he was thinking of cancelling a trip abroad due to the rising cost.
"The fault lies with President Erdogan, the AKP government, and those who for years turned a blind eye and supported them."
Investors appeared to flee as volatility gauges spiked to the highest levels since March, when Erdogan abruptly sacked the hawkish former central bank chief and installed a new governor, like the president a critic of high rates.
Against the euro, the currency weakened to a fresh record low of 14.6442 on Tuesday.
The 10-year benchmark bond yield rose above 21% for the first time since the start of 2019. Sovereign dollar bonds suffered sharp falls with many longer-dated issues down 2 cents, Tradeweb data showed.
As the lira plunged, the main share index rose more than 1% due to suddenly cheap valuations. However bank stocks dropped, with the banking index down 2.5%.
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