The Turkish lira plunged to record lows Tuesday after President Recep Tayyip Erdogan stuck to his support for interest rate cuts, warning his country was in a "war of economic independence."

The Turkish currency exchanged hands at more than 13 Turkish lira to the dollar, a 15% fall, before recovering slightly from the historic drop.

Turkey is facing the worst currency crisis since August 2018 when the value of the lira hit historic lows following diplomatic disputes with then US President Donald Trump.

The Turkish central bank on Thursday was pressured by Erdogan and cut its policy rate from 16 to 15 percent despite rising inflation and fast-depreciating currency.

"Traders have finally been tipped over the edge and completely lost patience with the policies being carried out by the central bank," Craig Erlam, senior market analyst, told AFP.

"There's a reason why central banks are independent and this is what happens when the divide is crossed. A perfect storm of politically driven monetary policy, a complete disregard for inflation and other central banks taking a more sensible approach," he said. 

Erdogan, an outspoken opponent of high-interest rates, has always built his popularity on a reputation of forging strong economic growth and improving the income of families across the country.

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After a cabinet meeting on Monday, he addressed the Turkish people and defended the current policies.

"We see the game played by those over the currency, interest and price hikes ... and show our will to proceed with our own game plan," he said. 

"We will emerge victorious from this war of economic independence with the help of God and our people."

Turkish Central Bank: exchange rates are determined by supply and demand conditions

The lira has lost more than 40% of its value against the dollar since the start of the year and the annual inflation rate has reached nearly 20 percent, overpassing the government's target.

The Turkish minimum wage was worth around $380 in January, and after Tuesday's dramatic lira drop, it is now worth $224.

After the lira crash Tuesday, Erdogan met with central bank governor Sahap Kavcioglu, according to local media, which provided no further information.

In a statement, the bank defended Tuesday its position, saying "exchange rates are determined by supply and demand conditions according to free market dynamics."

"Under certain conditions, the Central Bank may only intervene in excessive volatility without aiming any permanent direction."

Analysts believe the blizzard of economic misfortunes in the country could put pressure on Erdogan as he prepares for the 2023 elections amid signs of consolidation within the opposition.