Makes Turkey’s eyes weakened by almost 10% against the US dollar on Tuesday, the day after President Recep Tayyip Erdogan insisted there would be no way back from his unconventional policy to increase interest rates.

Lira fell to a record low of 13.44 against the dollar before recovering several losses. It traded at 12.51 against the dollar in the afternoon – down 9.9% from near Monday. The currency traded at 14.08 against the euro. Lira has lost around 40% of its value since the beginning of the year.

Erdogan, who has declared itself “enemy” of high borrowing costs, described its economic policy as “economic war independence” during the television address late at night. He explained that the government would not retreat from the policy of reducing the loan level to increase growth.

Contrary to traditional economic theory, Erdogan argues that high interest rates cause inflation. Usually, the central bank raises these tariffs to explore consumer prices.

“Whether we will give up on investment, production, growth and work by maintaining an understanding that has applicable in our country for years, or we will be involved in historic struggles in line with our priorities,” Erdogan said. “As usual, we prefer the struggle.”

“We are determined to do the right thing for our nation,” he continued. “We encourage investment, production and export. … we protect work. … we care about growth.”

The Turkish central bank has cut interest rates by 4 percentage points since September, raising concerns about its independence from the Erdogan government. The President has fired three bank governors since 2019.

Inflation runs around 20%, eroding public purchasing power.