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Why Turkish Lira is Falling?

Why Turkish Lira is Falling?

Tue, Jan 17, 2023, 06:27:59 PM

Turkish Lira is falling. The question ‘’Why Turkish lira is falling?’’ Is a hot topic especially for people in business world, who are planning to invest in Turkey and Turkish Lira. There are various underlying factors why Turkish lira is falling. The main reason is that the Turkish President Erdogan follows a strategic policy that is keeping interest rates low on the market in order to fight global economic crisis. The situation attracts plenty of investors around the world and makes Turkey and Turkish Lira a considerable investment opportunity. 

Global Economic Crisis

Started with the Covid, the economy of the world was affected badly with lockdowns and such. Even though the international trades continued, the domestic trade was almost halted during this period. Due to this, there were so many tradesmen, shopkeepers, business owners went either bankrupt or sunk in debt. These events also reflected on the good prices as well. It was an unknown period which the working power was significantly weakened and the supply couldn’t keep up with the demand. This prepared a bad environment for the market for suppliers to stock and slow down the production to keep up with the demand while black-market and scalpers rose up in numbers. It was time of uncertainty and soon the Ukraine – Russia war followed.

After Effects and Rate Cuts 

Apart from Global Crisis and Covid, Turkish economy had some difficult choices to face within itself as well. There were political conflicts with some of the countries and it was followed by sanctions on the goods and foreign currencies. To offset these, the decisions on rate cuts were made hastily and this caused the world to distrust Turkish Lira as a dependable currency. Between 2021 and 2023 there were numerous rate cuts on Turkish Lira which caused inflation and weakened it. Meanwhile, USD was gaining value itself and this caused the Turkish Lira to be weakened even further. The devaluation of Turkish Lira has slowed down but it is still not gaining value over other currencies. The current exchange rate of TRY per USD is 18.79 which is still considered the all time high.


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