Turkey’s central bank is going a different direction than countries battling inflation after the Covid-19 pandemic. Instead of raising rates, Turkey is lowering them.
So far, that has been a recipe for disaster. The country’s inflation probs have only been exasperated by the rate cutes. The country’s currency, the Turkish lira (TRY), has been in rapid decline against the U.S. Dollar. In the chart below, what you’re seeing is what $1 USD is worth in TRY (as of today). As you can see, that figure has skyrocketed in the last few weeks:
With this rapid debasement of the lira, coupled with Turkey’s 20% inflation rate, the country is in deep trouble.
Scores of Turkish citizens have taken to the streets in protest of President Recep Tayyip Erdogan’s policies. Unfortunately, the President and his political party are disaffected. A member of the Turkish ruling party suggested simply eating less: “We can buy two tomatoes instead of buying two kilograms. It’s not that healthy to eat forced crops during winter anyways.”
Earlier this week, he defended his policies, claiming that Turkey is waging an “economic war of independence.” If that’s the case, it’s fair to say they’re losing it. Turkish citizens are rapidly abandoning the lira for the Dollar and other currencies.