For almost two years till now, the Turkish lira has faced many challenges that have led to its devaluation to unprecedented levels, despite the economic results achieved by various sectors in Turkey in addition to the revelations was announced by Turkish President Recep Tayyip Erdogan Especially in the field of energy.
The depreciation of the Turkish lira raises many questions about the reasons behind it?
And who are the main stakeholders?
In the continuing decline with a view to putting pressure on president Erdoğan and his government that runs the country who works to support the economy, the commercial market, and finance in various capacities and ways. Even though, it achieved what it sought in the midst of pressure practice in terms of Turkish Lira.
Omran Trk Real Estate Company Based in YALOVA the Turkish state pursued the Turkish lira file and the fierce war that it is fighting in the face of anyone who seeks to keep it low in front of other hard currencies and monitored the main causes and causative of what the Turkish lira is going through in this current period.
The Turkish lira started approaching the 10 lire barrier per 1 dollar in dollar rising rapidly against the lira Specifically during October 2021 Although still between 50.9 and 60.9 per dollar. However, projections by economic analysts indicate that the Turkish lira is headed towards the 10.
It seems remarkable that President Erdoğan’s statements, at the same time the decisions he makes regarding monetary policy and the attempt to revive the Turkish lira, as well as the removal of officials from the Central Bank and interest rate reduction.
Although President Erdoğan is described as a formidable enemy for interest rates, he adopts the theory that lowering interest rates will lead to reducing inflation. “
Months ago, the Turkish Government said it was “moving under a new economic policy based on lowering the interest rate in order to fight inflation that has reached dangerous levels”.
On 21 October, the Central Bank of Turkey Lower the interest rate to 200 Points mandatory for buybacks “Repo” for a week to become 16 %when it was %18.
This was in a statement following a meeting was held by Monetary Policy Committee at the Central Bank of Turkey headed by governor Shihab Qaji Oğlu.
The statement noted that the Commission had decided to support sustainable financing practices as a long-term policy without changing the main objectives of monetary policy.
That reduction was preceded by another reduction on 23 last September when the central bank Lower interest rate 100 Point mandatory for buybacks “Repo” for a week to become %18.
Once the interest rate has been reduced, the Turkish currency starts to fall dramatically against the dollar and other hard currencies, including the euro.
As Omran Trk has followed, the removal of numbers who were working in the Central Bank of Turkey had a negative impact on the recovery or non-recovery of the Turkish lira so Erdoğan appointed Shihab Kafji Oğlu as the new Governor of the Central Bank last March, in his fourth change in less than two years after a series of dismissals of old governors who are Naji Agbal, Murad Uyasal, and Murad Tishtin kaya.
Erdoğan has dismissed two deputy governors “Samih Tomin and Ogor Namik Kojok” of the Central Bank in mid-October 2021 with another member of the Monetary Policy Committee “Abdullah Yavash”. Following this decision, the Turkish lira experienced a rapid decline in its value.
Economic analysts have asserted that “the removal of the three officials is due to a disagreement between President Erdogan’s vision of refusing to raise the interest rate in order to lower inflation rates, and the view of dismissed officials who support raising the interest rate in order to raise the value of the lira.”
According to what is reached to Omran Turk, the main secret behind the dismissal of the governors is that the former governors refused to lower the interest rate while economic performance improved and inflation fell to a percentage lower than the interest value.
While Erdoğan saw the high interest remaining with low inflation as an additional profit for the central bank partners at the expense of business, factories, and others which means Turkish citizens.
The Turkish lira began to decline about four months after the exemption of the former Governor of the Central Bank Naji Agbal, and the appointment of Professor Shihab Kafji Oğlu’s successor, last March.
Economic analysts have stated the reasons for the depreciation of the Turkish lira are” holding elections early by Turkish opposition figures and fears of rising global inflation. “
The same economic sources said the drop in the Turkish lira was due to the American inflation expectations which raised the yield of treasury bonds and the dollar index to pressure emerging market currencies such as the Turkish lira.
The main inflation rate reached its highest level in two and a half years at 19.58 % last September, while the main measure confirmed by the Governor of the Central Bank of Turkey, Kafji oğlu, over the past month was 16.98%.
This is not the first time the Turkish lira has faced pressure but earlier last year, 2020 it declined in its value, but President Erdogan’s policy, economic outlook, and reforms succeeded in reviving the lira and restoring its value, which many businessmen and investors are waiting for in this current period.
In 2018, the Turkish lira fell before the presidential election, after Turkey entered the Gulf Crisis, when the Turkish government warned that the reason for the sudden fall was an economic war by lira speculators, who simultaneously withdrew their money from the Turkish market.
Their goal was to strike the lira and show Erdoğan government to be unable to control exchange rates, and the real aim is to topple the Erdoğan government in the elections because the economy only moves the Turkish electorate.
But the president Erdoğan, in his 2018 election program, challenged the interest lobby and said that he would “reduce the price of the benefit and appoint Baraat Albayrak as Minister of Finance, but the money lobby waged war in which it won over the Turkish lira and Erdogan policies so that Erdogan government would have to raise the price of profit again.
Erdoğan as it reached to Omran Trk insists on lowering the interest rate for the following reasons:
Raising interest means transferring funds from factories and projects to banks because profits are tempting there.
_Bank financing has a large stake for America, which means that American financial investment institutions make profits.
_Raising the interest in a country will inevitably lead to an economic catastrophe which will eliminate the middle class and drag it into the poor so the states compulsory will cancel development programs and major projects.
• Turkish citizens are seriously affected by inflation, price increases, and the minimum salary ratio stable.
According to an economic expert, as quoted by the Turkish News Agency since the start of the war on the Turkish lira, and to support the Turkish lira and the economy, “President Erdoğan wants to open more stable relations and attract foreign investors and he aspires to a particular kind of real investment that benefits Turkey, or to a positive kind of investors Because there are two types of investors:
Financial speculators who enter and exit quickly
those should be unwelcomed, obstruction by the central bank and real investors or strategists who create and expand promising projects for Turkey so they deserve encouragement and welcome by President Erdogan.
Omran Trk has followed according to other economists “The deterioration in the rate of the Turkish lira from time to time was caused by an organized American war to break Turkish economy.
Other reasons relate to the foreign policies of the Turkish Government, in particular its operations in Syria and the Eastern Mediterranean, and the clash with America and Europe Besides the Corona crisis.
In the midst of all this, those who are interested in the economy expect that “the deterioration of the lira will not affect the price of commodity and services at a high rate, since the Turkish economy is based on
national production at a rate of 65-65, 96% of the labor force, and at the same time Turkey exports $225 billion annually to 140 countries in the world.
The Turkish lira has historically gone through a number of stages until it was able to maintain its value alongside world currencies. The most important stages include.
_Turkey terminated the trading of the old 6-zero currency early in 2005
_It started trading a new form of Turkish paper money which contained a sentence: LİRASI TÜRK YENİ which means New Turkish lira.
_20 million old Turkish lira equivalent to 20 modern Turkish lire in the context of understanding the difference between the old Turkish coins (6 zeros) and the current Turkish coins.
_Turkey issued in 2007 a new edition of Turkish coin currency which is currently in use.
Old Turkish currency with 6 zeros (YENİ TÜRK LİRASI), it is no longer in circulation and unavailable in markets for several years.
_In the 1990s, for the first time in the history of Turkey, 1 million lira and 5 million lira were printed and even it reached for the printing of 20 million.
_when AKP came to power and Turkey’s economic renaissance 6 zeros have been deleted from the coin in 2004.
1 million was equal lire, 1 billion equal 1000 lira, and the trillion was worth million lire so the value of the lire was worth only one dollar.
It recalled that after the establishment of the modern Turkish Republic, the first lira was printed with the picture of Atatürk and the Ottoman letter in 1927.
Omran Trk asserts, according to its director Abd Al Aziz Alkashef, that the real estate sector and even the tourism sector have not been affected by the pressure faced by the Turkish lira, which will be overridden sooner or later and it was confirmed by the President of Turkey Erdoğan who said in recent declarations: eventually we will achieve our goal of making our country among the 10 largest economies in the world, and to that end, we will continue to work at the same pace without any procrastination.