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.
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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.
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.
