The Turkish Lira (TRY) rose as much as 25% in Monday trading & as much as 15% in Tuesday trading. It stood at x/U.S. Dollar as of 5 PM Cairo time in yesterday’s trading.
Backstory🔙 Turkey has been in a debt & currency crisis since 2018. The country’s inflation rate has been in the double digits since 2017, & most recently recorded an annual inflation rate of 21.31% in November 2021.
Below is the U.S. Dollar/TRY foreign exchange spot rate for the past 10 days, where you can clearly see how volatile it’s been.
Why has this been Happening🤨 Most experts believe that President Erdogan’s unusual stance on inflation is what’s behind the sharp decrease in the TRY. He has long argued that high interest rates cause inflation, contrary to what economists generally say: that increasing rates will drive down prices. His views have caused the TRY’s value to drop steadily over the past five years.
More Details🧐 The TRY has been especially much more volatile in the past few weeks. The currency hit an all-time low earlier this week of 18.36/U.S. Dollar before rebounding to as high as 11.09/U.S. Dollar, a 60% loss of its value against the U.S. Dollar this year.
Despite the TRY’s gains, its strength is still significantly weaker than January 2021, when 7.40 TRY were enough to buy a U.S. Dollar.
Why is this Important🤔 Prices of basic goods, as well as rent, have skyrocketed & many Turks are struggling to make ends meet. Imports & fuel prices have also soared in Turkey, a country that relies heavily on imported raw materials.
