In 2013 one US dollar would have bought you fewer than 2 Turkish liras. Just four years later in 2017 one US dollar would have bought you twice as much — 4 Turkish liras. By the summer of 2021 one US dollar would have already bought you 8 Turkish liras.
What’s worse, over the second half of 2021 the loss of value kept intensifying with inflation hitting 20 percent in October and the exchange value to the dollar declining further to over 10 liras.
Losing 75% of the purchasing power in eight years, and then another 25% over just three months is probably a situation calling out for an intervention by the highest reaches of power, an intervention by Sultan Erdogan himself. And intervene he did — Erdogan held a speech praising easy money policies and cut interest rates further.
The result is that one US dollar now buys 12 Turkish liras.
This man hates the Turkish lira like he hates secularism. If he was half as effective at exporting his Muslim Brotherhood Islamism as he has been at murdering Turkey’s currency we might now be looking at an MB commonwealth stretching from Turkey to Syria to Egypt to Libya, which he also attempted but has been far less successful at.
One must almost admire the sheer pigheadedness of his self-immolating easy money fanaticism. You’d think it was one of the Five Pillars.
Turkish lira sinks to new low as investors warn of ‘vicious cycle’
Turkey’s lira dropped to an all-time low on Friday as investors reacted with bewilderment to the previous day’s cut in interest rates, which some analysts say has plunged the country into a currency crisis.
The lira had rebounded in morning trading from a heavy fall, but sustained a fresh jolt of selling by the London afternoon. The currency was recently trading down around 2 per cent at TL11.32 per dollar.
The currency has declined more than 30 per cent this year after investors lost faith in the authorities’ ability to manage the economy in the face of inflation that accelerated to almost 20 per cent in October. Turkey’s central bank under governor Sahap Kavcioglu has slashed rates from 19 per cent since the start of September — under heavy pressure from president Recep Tayyip Erdogan — despite the runaway price rises.
“If a currency loses more than one-third of its value on the FX market in less than three months then it is probably justified to speak of a crisis,” said Ulrich Leuchtmann, Commerzbank’s head of FX research.
Investors said there was little prospect of a lasting recovery for the lira unless the central bank could somehow free itself from Erdogan’s unorthodox belief that high interest rates fuelled, rather than tamed, inflation.
Erdogan, who fired Kavcioglu’s well-respected predecessor in March, has stepped up his campaign for lower borrowing costs in recent months in a bid to bolster growth as he faces a slide in popularity.
Turkish lira notches another record low after Erdogan speech
The Turkish lira hit yet another record low on Tuesday morning after President Recep Tayyip Erdogan praised a recent interest rate cut and declared that his country was fighting an “economic war of independence”.
The currency, which is down more than 30 per cent against the dollar this year, suffered its 11th successive day of losses after the Turkish president used a combative speech to expound his vision for the country’s economy. It fell almost 3 per cent against the greenback to trade at about 11.7 per dollar.
Erdogan, a life-long opponent of high interest rates, used a speech on Monday night to declare that he was “pleased” the bank had cut rates for the third month in a row last week, despite warnings from economists it would stoke inflation that is already running at an annual rate of 20 per cent and further destabilise the currency.
Painting a picture of a dark global conspiracy aimed at subjugating Turkey, the Turkish president said his nation would not give in to economists, opportunists and “global financial acrobats” calling for interest rate rises.
The government was prioritising growth, he said, to encourage investment, production, exports and unemployment. “That’s why we pay no attention to the clamour of the doomsayers,” he said. “With the help of God and the support of our people we will emerge victorious from this war of economic independence.”