By Ezgi Erkoyun, Nevzat Debranoglu

ISTANBUL (Reuters – Turkey’s lira sank to new lows after President Tayyip Erdoan doubled down on the unorthodox low rates policy. He referred to Islamic usury doctrine.

Turkey has been experiencing its worst currency crisis since the 1980s. The President’s demand for 500 basis points in interest rate reductions from September caused a panic that saw the lira plummet 35% over the past 30 days.

It fell as low as 17.7540 against the dollar. This was an all-time record and it stood at 17.7 GMT. Also, it touched 20.0581 against the euro. However, it traded at 19.92 GMT.

Erdogan spoke out in defense of his economic policies on Sunday. He compared the volatility in the currency to the attacks on the country’s economy, which have their roots in the 2013 nationwide protests that began in Istanbul’s Gezi Park for green space access.

“We’re lowering interest rates. Expect nothing less from me. He said that he was a Muslim and would do whatever Islamic teaching requires. This refers to Islamic finance, which avoids high interest or excessive usury.

Erdogan continues to pursue his new economic plan, which prioritizes lending and exports, despite widespread criticism.

President pressured the central bank into cutting rates last week by another 100 points. Real rates plunged further into negative territory which is alarming for both savers as well as investors.

Erdogan’s recent speech confirms his plan more “but also suggests that he is going for more rate cut,” according to Kieran Curtis of Aberdeen Standard Investments, portfolio manager.

I believe many investors now see 2023 and its election as the moment when it could potentially be interesting again.

He said that capital controls to prevent Turks buying foreign currency would be politically controversial so it seems unlikely.

Last month’s inflation spiked to 21% and will likely rise to 30% next year. Both economists and lawmakers opposing monetary tightening claim it is dangerous and has led to a rise in import prices.

Analysts say that the lira lost over half its value in this year, and has been among the worst performers for three consecutive years. This is primarily due to weakened monetary credibility.

Five times this month, the central bank intervened to try and slow down the selling process. According to bankers, it sold $6 billion more from its foreign reserves that were already low.

Turkey’s biggest business organization, TUSIAD, called for the government Saturday to end its low rate policy and to return to the “rules economic science”.