The Turkish lira collapsed to a fresh record low against the US dollar on Thursday before paring some of its losses. After the central bank chose to leave interest rates unchanged, the lira plummeted, prompting calls for the institution to impose an emergency rate hike. But with better-than-expected economic data, will policymakers listen to the desperate pleas?

The lira cratered to an all-time low of 8.3304 against the greenback toward the end of the trading week. But the currency recuperated and headed toward the lower end of the day range. The lira is on track for a monthly loss of 7%, bringing its year-to-date decline to 40%.

Murat Uysal, Turkey’s central bank governor, told a press conference in Istanbul that the organization had responded appropriately to the lira’s freefall, despite crashing to another record low. He explained to reporters that the lira is trending downward and experiencing volatility due to geopolitical tensions.

Ankara is dealing with the Armenia-Azerbaijana border dispute while also engaging in tense disagreement with Greece over land in the Mediterranean. But Turkey is facing all kinds of problems that echo the currency crisis of 2018.

Dwindling foreign exchange reserves, burdensome federal debt, and inept central bank policy – market observers say that officials need to react responsibly. If not, global financial markets will lose all confidence in Turkey when it comes to effective monetary policy management.

However, President Recep Tayyip Erdogan believes that the best way to mitigate the economic downturn and support the lira is through lower interest rates. Erdogan has had serious disagreements with the central bank over the last year, resulting in the previous governor’s resignation.

Turkey has seen improving economic data in recent week. October business confidence climbed to 108.1, up from 105.3 in September. Capacity utilization increased from 74.6% in September to 75.4% in October. The October Economic Confidence Index reading edged up to 92.8, up from 88.5 a month ago.

The USD/TRY rose 0.4% to 8.2923, from an opening of 8.2593, at 18:32 GMT on Thursday. The EUR/TRY dropped 0.26% to 9.6766, from an opening of 9.7006.