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Recent interest-rate shifts in the U.S. and other developed economies were bound to have consequences for emerging markets, and it looks like Turkey is first in the dock. The lira plunged about 14% versus the dollar Monday in an incipient crisis that is mostly but not entirely the fault of President Recep Tayyip Erdogan.

This weeks lira ruction was caused by Mr. Erdogans sacking on Saturday of the head of the central bank. The main sin of the deposed monetary maestro, Naci Agbal, was to wage an aggressive battle against inflation. He had raised the policy rate to 19% from 10.25% in an attempt to stabilize consumer prices that rose 15.6% year-on-year in February. Mr. Erdogan prefers to goose economic growth as much as possible no matter the inflationary consequences, and he seems to believe that higher interest rates cause higher prices.

Mr. Erdogans bad economic management isnt news. Turkey on his watch has suffered repeated crises of various sorts, most recently with another inflation spike that became a currency crash in 2018. But two differences are notable this time.

One is that investors had convinced themselves Mr. Erdogan had finally seen the light on economic policy, and now claim to be surprised that he hasnt. Mr. Agbals appointment in November, along with the resignation of Mr. Erdogans son-in-law who had been finance minister, was heralded as a sign that competent people would be in charge of macroeconomic policy. Yet Mr. Erdogan is Turkeys biggest economic problem and guess what, folks: Theres still gambling at Ricks.

The other new factor is the global economic environment, which is much less hospitable than during the last Turkish crisis two years ago. The pandemic is straining economies everywhere, and Turkey has been hit especially hard by the collapse of travel due to its reliance on tourism. With the summer vacation season in doubt, especially for Turkeys many European visitors, its not clear how the country can start earning its way out of the financial hole.

Read more:
Erdogan Tanks the Turkish Lira - The Wall Street Journal