The Turkish Lira has been on a downward slope since around 2008/2009 and people often don’t understand exactly why this is. After all, Turkey is a potentially powerful and dynamic country due to their highly educated and very hard working population, so fundamentally the Turkish Lira Forecast should be very bright.
What’s happening?
The basic problem in turkey is that its savings are insufficient to meet its financing needs thus resulting in compounding debt that becomes increasingly more difficult to reverse. A lot of people will naturally point the finger at the heavily critized President Recep Tayyip Erdoğan, but he came to power in 2014 and by this time, Turkeys debt problems had been compounding for almost a decade. So how much is he to blame?
People will think whatever they want about Erdoğan and whilst he does continue to make mistakes and will always be a stout fundamentalist, we must acknowledge that Turkey is a country with a dynamic population even if we do not agree with there political choices. More broadly turkey’s financial problems should make us question the future of our western monetary system. Having said that, Turkeys problems are here and now and decisive, sensible and strong decision making is vital.
Lira forecasting – an all time low
The mistakes from Erdoğan do continue to mount causing further strain on the Lira against the US Dollar and in 2021 the currency is now on very dangerous ground. His recent announcement backing the lowering of interest rates by a deadline that wasn’t entirely clear has sparked fears of premature rate cuts. All of this despite inflationary pressure actually remaining reasonably strong.
After the sacking of three bank governors in as many years (which hurt the Lira in each case), the President believes that high interest rates are, by their nature, inflationary which is a belief that completely contradicts the economic text books. Turkey’s inflation rate was frozen at 19% back in May 2021
source: tradingeconomics.com
What’s the forecast like for the Turkish Lira?
The Turkish Lira is expected to remain under severe pressure after already losing significant value over the last 12 months. Turkish
