Almost 2 weeks ago, CBRT (Central Bank of the Republic of Turkey) introduced a new regulation. This regulation blocked companies from getting new cheap loans denominated in Turkish Liras if they held more than a certain amount of foreign currency. This regulation was introduced close to when forex markets close and the Turkish Lira gained some value quickly at that time. When markets opened on Monday, the Turkish Lira continued to gain value and reached 0.06 USD.
This regulation did not fix the fundamental problems in the Turkish economy though, high inflation and low-interest rates still continue and this move hurt the trust of foreign investors who invest in the Turkish Stock market. All of this brings us back to today, CBRT's and Erdogan's new scheme, and the new regulation failed in to reign the loss of value in the Lira. It is almost back to the levels before the new regulation was introduced and trading at 0.058 USD.
Officials and Erdogan still refuse to listen to economists around the country and insist on continuing with this new Turkish Model of Economy, they try to stave off the loss of value with phoney tricks and regulations. I don't see the Turkish Lira gaining any value before the fundamentals are fixed and foreign investors once again gain trust in Turkish markets. But sadly as I mentioned before, CBRT has no intention of raising interest rates any time soon.
At the beginning of this month, the minimum wage got a 30% increase. When you consider that 42% of the country works for minimum wage, I am confident that this is going to result in an increase in inflation. The outlook for the Turkish Lira in future is very grim.
Thanks for reading this quick look at the state of the Turkish Lira.
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