Attention has been focused on the Turkish pound since late September, as the currency continues to be embroiled in a currency crisis. The Turkish Central Bank (TCMB) failed to intervene at the urging of President Recep Tayyip Erdogan, and the Turkish pound is in the midst of a free fall in 2022.
The pound traded at 16.76 against the dollar on Tuesday afternoon, recording a new fall of 1.10%.
Rising food and energy prices as a negative result of the Russian invasion of Ukraine hit Turkey harder than most countries: it is the third largest exporter of wheat in the world; it imports 93% of the oil it consumes and 99% of its natural gas. consuming. In terms of Turkish lira, food prices are rising by more than 93% per year, while energy prices are rising by a staggering 92% from year to year (Brent oil). Overall, this led to a 73.5% annual increase in Turkish inflation by May.
As the Turkish government continues its policy of compensating domestic savers for the fall of the pound in an effort to curb demand for foreign currencies such as the euro and the US dollar, TCMB’s net reserves have fallen to -55 billion dollars when estimated foreign exchange deals with Turkish domestic banks, according to Reuters.
As noted in December 2021, “to offset the losses, the TCMB will need to print more currency – which could exacerbate the ongoing issue of inflation, an issue that cannot be resolved through the misguided obsession of Turkish President Recep Tayyip Erdogan.” Erdogan with low interest rates. ” As things stand now, the Turkish pound will continue to murmur until morale improves – or rather, until Turkey adopts a sound monetary policy.
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