Turkey is one of the famous countries for tourism, The Turkish Lira was worth 7.03 against 1 USD on 14 February 2021. But now the Turkish Lira is crashing. The Turkish Lira is now worth 13.73 against 1 USD on 3 December 2021 but why?
There are 2 main reasons behind it.
1. Turkey’s central bank cut interest rates.2. Turkey is now in FATF’s Grey List.
How do the central bank’s Interest rates affect the currency?
When the central bank cut interest rates that means you don’t have to pay much interest rates to get loans compared to before.
How does FATF’s Grey List affect the country’s economy?
When FATF put any country on the grey list then foreign investors don’t prefer to invest their money in that country and it became hard for any country on the Grey list to get any foreign Loans. and ->>>
So, the country has to print more money to run the country or to spend money to do any type of project. And when the country prints more money eventually the value of the currency crash.
What is the reaction of the Turkish people?
Turkish people’s reaction to this is very bad because of the inflation which they are facing. Turkey’s economy is heavily dependent upon imports for producing goods from foods to textiles, so the rise of the dollar against the lira has a direct impact on the price of consumer products.
What President Erdogan says?
Erdogan says the lira’s troubles are the result of foreigners sabotaging Turkey’s economy as well as their supporters within the country. In a speech on November 22, he declared an “economic war of independence”, which he vowed Turkey would win.
You can read our full article about the Turkish Lira Crash