What is Happening to Turkish Lira?Fri, Dec 9, 2022 12:00 AM
Turkish lira has been quickly losing value since 2020 due to variety of reasons but the main reason behind this is the rate cuts demanded by the President Erdoğan to stimulate growth in industry and exports. Turkish lira currently is hovering at a record low past 18.6 per USD after the central banks interest rate cut by 150 bps in November pushing borrowing costs from the Central Bank to the lowest since August of 2020. TCMB cut its key rate by 1000 bps since September 2021 and with the November cut, the bank signaled that it would be the final cut of its current rate-cutting cycle.
Why Cut Base Rates?
Cutting base rates or increasing them has been a used method in economics to balance the growth, development and inflation. It can be valuable tool if it is used correctly but it can be a double-edged sword as well. In short, a rate cut is done to help investors to borrow money from the Central Bank which can be used for development and stimulate the growth but its side effect is devaluation of the currency and inflation. Meanwhile increasing rate cuts causes the opposite effect increasing the value of the currency and lower inflation but dependence to other countries and debt increases. President Erdoğan believes that by cutting rates the economy, especially with the help of foreign investors, would be bolstered, development and growth would be sped up.
Devaluation of the Turkish Lira
Since 2020, Turkish Lira has lost more than twice of its value. While Turkish Lira was 5.82 per USD in Jan 2020, TRY was recorded as 14.54 per USD in Jan 2022. In December the current ratio is 18.63 TRY per USD in the eve of a new year. The devaluation of the Turkish Lira happened so quickly due to several factors. With the outburst of the COVID pandemic in the world, Türkiye went into a total lockdown in March 2020 which was progressively declined and finally started its normalization efforts in May 2021. In this process, countless people lost its job, went bankrupt, sank into debt etc. While Türkiye was still trying to cope with side effects of the lockdown, political decisions, limitations on the world supplies and unrest in the world dealt a huge blow to Turkish Lira.
It is possible to follow the rates of Turkish lira to usd, Turkish lira to euro, Turkish lira to pkr from exchange offices or mobile banking applications.
Monster in the Closet: Inflation
With the devaluation of TRY versus USD and other currencies price of the goods climbed quickly. Effects of the lockdown paved the way to the inflation and with the crisis of the world energy and food sources, many of the trade goods saw an increase in their production costs and this reflected on the final prices harshly. Governments attempts to cut the credit base rates enhanced with the global problems and it was reflected on the people of Türkiye. According to the government sources the annual inflation is currently at 84.39 percent meanwhile producer prices saw a record high in October with a 157.69 percent which eased to 136.02 in November.
Housing and Rental Properties
The housing developments in Türkiye sped up despite the inflation and devaluation of the Turkish Lira. Rental property cost has risen up more than %200 in metropolitan cities like İzmir, İstanbul and Ankara in a year. Houses which were about 1000 TL increased to 3000 TL meanwhile business properties surpassed the houses with increases in property prices against the inflation. The increases in prices in real estates have slowed down but still continuing. Most of the developments are coming from the international or Turkish citizens who work abroad since the USD gained an incredible value against Turkish Lira.
Investors from All Around the World
Türkiye, being a developing country, attracts people all over the world and is considered a cheap and safe country to live or to invest in. Surrounded by Aegean Sea, Black Sea and Mediterranean, Türkiye is a gateway between Asia and Europe while bordering important countries like Greece and Bulgaria. Furthermore, Türkiye is a highly preferred country for the tourists with its all kinds of natural beauty, holiday facilities and warm weather. Most of the tourists prefer Antalya and Muğla for their summer holidays while lovers of history plan their holidays in Istanbul, İzmir and Ankara. Visitors who came to Türkiye for holidays spend their time beautifully and some of them consider buying a property in Türkiye such as a summer house by the sea or a winter house on a mountain. Some of the tourists even consider a Turkish Citizenship through investment.
Turkish Citizenship for the Investors
One of the easiest and valuable methods to gain a Turkish Citizenship is through property investment. Property market in Türkiye is a lucrative market which gains value over time regardless of the type of the property. Living in Türkiye is to treat yourself with beautiful scenery, clean seas, delicious food and warm neighbours. Due to its history and geographical position, life in Türkiye is vibrant and has a lot of variety. You can find something you like in Türkiye if you look. To explore the blessings in Türkiye to the full, you can earn a citizenship. Doing an investment in Türkiye, you can gain full benefits of the country like easy Schengen visa, dual citizenship, visa free travel etc. without a worry and have a property which its price rises continuously.
How to Earn Citizenship with an Investment?
Türkiye’s Citizenship by investment was announced in 2016 by the Turkish government to trigger foreign direct investment and improve its real estate sector. With this program, the investors are free to decide on the various means they want to contribute. The program first launched with a quoted entry cost of 1 million dollars which did not attract many investors. It was then reassessed to be 250.000 dollars. The country now makes an average of 250 million every month from its foreign investors only. However, as the applicants increasing so is the cost. The current minimum cost has been raised from 250.000 USD to 400.000 USD recently.