https://www.thedailystar.net/business/news/gold-prices-drop-tk-1749-bhori-3331736 Lira hits record low The Turkish lira hit a record low beyond 20 against the dollar on Friday, ahead of this weekend's presidential election runoff that will decide whether President Tayyip Erdogan extends his rule into a third decade. The lira touched 20.06 against the greenback at 1246 GMT before firming slightly. It ended the session at 19.978, a record closing low, and has weakened 6.3 per cent so far this year. Turkish assets have been under pressure since the first round of the presidential election on May 14, which showed Erdogan was poised to win in Sunday's runoff. The country's sovereign dollar bonds and equities have plunged, while the cost of insuring exposure to Turkish debt has spiked on expectations that Erdogan will forge on with his unorthodox economic policies, which analysts say have brought Turkey to the brink of an economic crash. "The Turkish lira has been notably depreciating daily" in anticipation of Erdogan's victory," said Commerzbank FX analyst Tatha Ghose, adding that the rate of decline "annualises to the equivalent of a major crisis." "Many observers forecast (an abrupt) breakout simply because it would be more probable than a system which indefinitely continues on a knife's edge." Reuters reported on Wednesday that there is disagreement and uncertainty within Erdogan's government over whether to stick with what some call an unsustainable economic programme or to abandon it, insiders say. After years of market interventions and other methods to cool forex demand, the Turkish central bank's net forex reserves dropped into negative territory last week for the first time since 2002. The net forex reserves stood at $-151.3 million on May 19, with the latest drop coming as forex demand surged over the election period due to expectations that the lira would extend its declines after the vote, having lost 44 per cent of its value in 2021 and 30 per cent in 2022. On Thursday, Erdogan said that Gulf states recently sent funding to Turkey, briefly helping relieve the central bank and markets. ................................................................................................................. For me it seems that you can print money by going short Turkish Lira as the interest rates are far below the real inflation there. So the Lira should collapse more this year. But I fear something like a currency cut or something like this, when the whole economy will collapse because of the high inflation. If inflation remains that high and go beyond 100% annually, a collapse of the total economy in Turkey is just a matter of sooner than later. Other opinions here ? I mean the believe that far lower interest rates can calm down much higher inflation rates is a myth like the failed experiment in the USA in the 70's or ? The inflation is just fueled more with that low interest rates there and the politics does not want a change there. The central bank in Turkey is also not independent so politics decide all.
They will be in good hands. China will come to their rescue, another country that will be on the "you owe me one" list that China keeps along with countries like North Korea, Russia, all of the African countries except South Africa and etc. Turkey is very crucial to China's "one belt one road" geopolitical project as it's right in the smack dab of where East meets West. China's already invested so much in Turkey; there is no way it will see its economy going down with folded arms.
China has tons of yuan and US$ to lend. China can rescue Turkey. In the olden days, Turkey was of the most important countries for the Silk Road. Turkey remains an important country for the Belt and Road and Sea and Air initiative. But some countries like Sri Lanka are having trouble paying the debt to China.
Well China knows that Sri Lanka wouldn't be able to pay. Anybody who took one look at Sri Lanka's economy knows Sri Lanka wouldn't be able to repay the debt but that's the whole idea. China doesn't really want Sri Lanka to repay the debt. China doesn't really want Sri Lanka's money; China wants Sri Lanka's land, its geographic location to be more specific so China can be more strategically positioned to have a more dominant position in the Pacific to go after USA. In the old times, China would've mobilized an army and invaded Sri Lanka but today it does so with money. That's the whole idea of China lending Sri Lanka money. Sri Lanka isn't the only place in Asia that needs "redevelopment" and "revitalizing the economy", why is China only extending loans to Sri Lanka? And if you really want to help Sri Lanka and at the same time get your investment back, why don't you enter into partnerships with Sri Lanka to help Sri Lanka develop its local businesses instead of insisting on Sri Lanka to repay and debt and then take its sovereign ports when it really can't repay the debt?
Turkey should end cooperation with the US and throw the US and NATO military out of the country as the US (and Israel) are in fact the main enemies of Turkey, IMO. Turkey should join the Chinese and Russian economic pact, incl. defense pact. This ongoing secret currency war against Turkey was waged by the US to force Turkey to obey the demands of the US, ie. its diktats regarding Russia, Syria, Libya, Kurds, Greece, ArmenianShaets etc. pp. Turkey should peg its currency to a strong basket index consisting of many strong currencies including the international gold index etc. This problem is IMO so simple to solve, but unfortunately the idiots in office in Turkey still haven't grasped it yet, even after so many years...
Turkey is just another failed state & Erdogan is a disaster. Lowering interest rates in the middle of hyperinflation? Yes that always works out well in the end. Erdogan's popularity just speaks to the number of Turks who don't know whats going on.
Careful on this trade; the tide's changing. 1) Erdogan's run out of money, now asset-stripping the country for help. It's a terrible spot to be in 2) He's conclusively proved his low interest strategy is screwing the economy utterly and completely 3) Even if he realised this before, U-turns before an election are never a good idea. 4) It's gone parabolic. The last gasp. 5) Post-election promises will have been made to assure the business communities - he now needs to act on them. I don't trade fundamental views but if I did, this one's a strong short USDTRY starting now, for the next couple of weeks tops.
Nothing bad will happen to Turkiye. Having high inflation is a norm. Low Lira is also a norm. It has been that way for years/decades. The citizens simply like Erdogan. That's why they elected Erdogan. Only economists and professional writers are worried; They keep on saying the end of near. They blow things out of proportion.