The value of Turkey's currency, lira, has nosedived since January and has lost more than 34% of its value against the dollar.
What caused this?
Construction Boom - The Turkish economy has been in slow-motion decline for a while, with the lira sliding steadily downhill since 2016.
A construction boom was happening and it reached its height in 2013 and 2014, as Turkish banks issued low-interest loans.
This construction frenzy has been at the heart of Turkey’s economy, accounting for up to 20% of the country’s GDP growth in recent years.
But this was not accompanied by having enough foreign capital.
So property developers funded this construction frenzy with cheap loans in foreign currencies. (In a parallel to the 2008 financial crash, the boom was funded by low-interest loans and ballooning debt.)
Turkey is also heavily reliant on imports for construction materials.
Much of the properties were built with the expectation that it would be bought by wealthy investors from Gulf countries.
But the demand from the Gulf failed to rise to the level hoped.
This lack of demand, alongside rising costs for iron and steel, has caused many projects to stall.
This was further complexed by poor regulation of this industry.
These factors affected the exchange rate of lira heavily.
Foreign Relations - The present crash was triggered by a spat with the US government over Turkey’s ongoing imprisonment of the American pastor Andrew Brunson, who is accused of involvement with a 2016 coup attempt.
Lira experienced a further blow when Trump Administration said doubled the tariffs on Turkish steel and aluminium.
Central Bank - In many nations, the central bank is independent of government. This means it can keep control of inflation by raising them when necessary.
But in Turkey, Mr Erdogan has made sure he controls the reins.
What are the consequences?
To repay loans in dollars and euros, as the weakened lira means there is now more to pay back.
Many middle class homebuyers who paid for new apartments upfront are also affected as these apartments are now on permanent hold because the companies can’t afford to build them.
Only upside to this is that the tourism industry has been flourishing due to the fall of lira.
How did this affect Rupee?
This turmoil has impacted many emerging markets due to deteriorating emerging-market sentiment among investors.
Rupee faced a huge blow as it was already being affected by lack of FII inflows and growing oil prices.
Hence the rupee plunged to hit a record low of 70.08 a dollar.
Central bank intervened to slow the pace of fall but it is unlikely that there could significant intervention as factors impacting the currency are coming from external sources.
Experts feel that the fall is not so dramatic and so not a time to panic.
Foreign investors investing in government bonds or fixed income may feel some impact due to this.
But the fall provides a big opportunity for exports especially at a time when trade wars are happening.