binance left Coinmarketcap net_left adver left

Turkey's lira logs worst year in two decades under Erdogan

Friday, December 31, 2021
Turkey's lira logs worst year in two decades under Erdogan © Reuters. FILE PHOTO: A money changer holds Turkish lira and U.S. dollar banknotes at a currency exchange office in Ankara, Turkey December 16, 2021. REUTERS/Cagla Gurdogan

By Ece Toksabay and Tuvan Gumrukcu

ANKARA (Reuters) - Turkey's lira has logged its worst year since President Tayyip Erdogan came to power nearly two decades ago, despite his appeal on Friday for Turks to trust his unorthodox policies of slashing interest rates in the face of soaring inflation.

The lira - by far the worst performer in emerging markets in 2021, as well as in the last few years - shed 44% of its value against the dollar over the year and 19% in the last week alone. [EMRG/FRX]

The currency crisis accelerated in recent months, rattling the $720 billion economy, largely due to Erdogan's "new economic programme" focused on exports and credit despite the lira's collapse and inflation of more than 21%.

To ease the turmoil, the president unveiled a scheme two weeks ago in which the state protects converted local deposits from losses versus hard currencies, sparking a sharp 50% rally in the lira with support from the central bank.

On Friday, Erdogan - whose opinion poll ratings are sliding ahead of an election in 2023 - called on Turks to keep all their savings in lira and shift gold into banks, saying the market volatility was largely under control.

"As long as we don't take our own money as a benchmark, we are doomed to sink. The Turkish Lira, our money, that is what we will go forward with. Not with this foreign currency or that foreign currency," he told a business group.

"We have been waging the battle to save the economy from the cycle of high interest rates and high inflation," he said, reiterating his unorthodox view that high rates lift prices.

In response, the lira weakened to as far as 13.63 before recovering to end the day flat at 13.1875.

The currency crisis, the second since 2018, has badly eroded Turks' savings and earnings while the record volatility has upended households' and businesses' budgets and future plans.

The lira has whipsawed from 18.4 to 10.25 versus the dollar in the last two weeks, capping its worst year since 2001, when International Monetary Fund support stemmed a crisis in Turkey.

Erdogan's conservative AK Party began governing the next year. Subsequent economic gains reversed around 2013 when measures of Turks' prosperity, equality and employment began sliding.

(Graphic: Emerging currencies in 2021, https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgbgjkpb/EM%20currencies%20Turkey%20tumble.PNG)

INFLATION RISING

The currency crash was triggered by the central bank's 500 basis points of rate cuts to 14% since September, carried out under pressure from Erdogan, who appointed the bank governor in March and has since replaced much of its leadership.

Economists and former central bankers have called the easing reckless given inflation is expected to hit 30% in December due to the lira depreciation. Goldman Sachs (NYSE:GS) expects it to reach as high as 40% by mid-2022.

The new deposit scheme is intended to reverse a tide of dollarisation. Under it, the state covers the difference between deposit rates and the foreign exchange and gold rate for lira converted into the new instrument.

Marek Drimal at Societe Generale (OTC:SCGLY) said it provided some backstop, though "market participants need to see tangible steps to address underlying problems in the economy".

Many economists have warned that if the lira continues to depreciate, the scheme could further stoke inflation and add to the state's fiscal burden.

Some political analysts say Erdogan is betting that protecting deposits, along with a 50% hike in the minimum wage, will halt the slide in his poll ratings and open a window for early elections.

PROTECTING SAVINGS

Finance Minister Nureddin Nebati said earlier in the week that Turks' dollar holdings have fallen, but official data showed local holdings of hard currencies, which includes companies, soared to a record $238.97 billion last week.

At the same time the central bank's net foreign currency holdings - its effective buffer against financial crisis - plunged to a near two-decade low of $8.63 billion.

The central bank announced five direct interventions to support the lira in early December, including more than $2 billion in the first three efforts.

It has announced none since the anti-dollarization scheme was unveiled on Dec. 20, though its reserves drop-off signals it backed some $8 billion in additional state interventions, according to bankers and others.

Erdogan's economic policy has sent real yields deeply negative and amounted to a red flag for foreign investors, who have fled Turkey in the last five years, a period in which the lira has shed some three-quarters of its value.

The premium demanded to hold Turkish hard currency sovereign bonds over safe-haven U.S. Treasuries soared by 136 basis points throughout 2021, based on the JPMorgan (NYSE:JPM) EMBI global diversified index.

The cost of insuring exposure to Turkish debt based on five-year credit default swaps (CDS) nearly doubled over the year to 566 basis points from 305, IHS Markit data showed.

(Graphic: Lira timeline December 2021, https://fingfx.thomsonreuters.com/gfx/mkt/egpbkjkqavq/Lira%20timeline%20December%202021.PNG)

Leave your comment
ig right nyse right Neteller adver right
APPROVED BROKERS
rakuten_main right top net_home_top ig_main right top Binance _ main right top fbs_main right top tifia_main right top
27-01-2022 18:51:16 (UTC+7)

EUR/USD

1.1145

+0.0003 (+0.02%)

Summary

Neutral

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (1)

Sell (2)

EUR/USD

1.1145

+0.0003 (+0.02%)

Summary

Neutral

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (1)

Sell (2)

GBP/USD

1.3388

+0.0003 (+0.02%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (5)

Sell (3)

USD/JPY

115.36

+0.01 (+0.01%)

Summary

Neutral

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (1)

Sell (4)

AUD/USD

0.7036

+0.0005 (+0.07%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (0)

Sell (6)

USD/CAD

1.2737

-0.0003 (-0.03%)

Summary

Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (0)

Sell (5)

EUR/JPY

128.57

+0.04 (+0.04%)

Summary

Neutral

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (1)

Sell (7)

EUR/CHF

1.0378

+0.0009 (+0.09%)

Summary

↑ Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (8)

Sell (2)

Gold Futures

1,796.25

-0.30 (-0.02%)

Summary

↑ Sell

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (0)

Sell (9)

Silver Futures

22.780

0.000 (0.00%)

Summary

↑ Sell

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (0)

Sell (9)

Copper Futures

4.4235

+0.0070 (+0.16%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (0)

Sell (10)

Crude Oil WTI Futures

87.48

+0.20 (+0.23%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (8)

Sell (1)

Brent Oil Futures

88.84

+0.15 (+0.17%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (9)

Sell (0)

Natural Gas Futures

4.341

+0.003 (+0.07%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (8)

Sell (0)

US Coffee C Futures

231.78

-7.12 (-2.98%)

Summary

Buy

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (6)

Sell (2)

Euro Stoxx 50

4,184.97

+20.37 (+0.49%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (8)

Sell (1)

S&P 500

4,326.50

-23.43 (-0.54%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (9)

DAX

15,524.27

+64.88 (+0.42%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (6)

Sell (1)

FTSE 100

7,554.31

+84.53 (+1.13%)

Summary

↑ Buy

Moving Avg:

Buy (7)

Sell (5)

Indicators:

Buy (6)

Sell (1)

Hang Seng

23,807.00

-482.90 (-1.99%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (6)

Sell (1)

US Small Cap 2000

1,932.23

-44.24 (-2.24%)

Summary

Neutral

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (2)

Sell (4)

IBEX 35

8,706.00

+85.80 (+1.00%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (8)

Sell (1)

BASF SE NA O.N.

68.450

+1.140 (+1.69%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (9)

Bayer AG NA

52.58

+1.03 (+2.00%)

Summary

↑ Sell

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (0)

Sell (10)

Allianz SE VNA O.N.

228.70

+3.90 (+1.73%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (0)

Sell (11)

Adidas AG

242.15

-1.05 (-0.43%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (9)

Deutsche Lufthansa AG

7.045

-0.022 (-0.31%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (1)

Sell (6)

Siemens AG Class N

140.50

-0.74 (-0.52%)

Summary

↑ Sell

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (1)

Sell (9)

Deutsche Bank AG

11.920

+0.500 (+4.38%)

Summary

↑ Sell

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (0)

Sell (8)

 EUR/USD1.1145Neutral
 GBP/USD1.3388↑ Buy
 USD/JPY115.36Neutral
 AUD/USD0.7036↑ Sell
 USD/CAD1.2737Sell
 EUR/JPY128.57Neutral
 EUR/CHF1.0378↑ Buy
 Gold1,796.25↑ Sell
 Silver22.780↑ Sell
 Copper4.4235↑ Sell
 Crude Oil WTI87.48↑ Buy
 Brent Oil88.84↑ Buy
 Natural Gas4.341↑ Buy
 US Coffee C231.78Buy
 Euro Stoxx 504,184.97↑ Buy
 S&P 5004,326.50↑ Sell
 DAX15,524.27↑ Buy
 FTSE 1007,554.31↑ Buy
 Hang Seng23,807.00↑ Buy
 Small Cap 20001,932.23Neutral
 IBEX 358,706.00↑ Buy
 BASF68.450↑ Sell
 Bayer52.58↑ Sell
 Allianz228.70↑ Sell
 Adidas242.15↑ Sell
 Lufthansa7.045↑ Sell
 Siemens AG140.50↑ Sell
 Deutsche Bank AG11.920↑ Sell
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank6,195/ 6,235
(0/ 0) # 1,263
SJC HCM6,195/ 6,255
(0/ 0) # 1,284
SJC Hanoi6,195/ 6,257
(0/ 0) # 1,286
SJC Danang6,195/ 6,257
(0/ 0) # 1,286
SJC Nhatrang6,195/ 6,257
(0/ 0) # 1,286
SJC Cantho6,195/ 6,257
(0/ 0) # 1,286
Cập nhật 27-01-2022 18:51:21
Xem lịch sử giá vàng SJC: nhấn đây!
ↀ Giá vàng thế giới
$1,797.36-24.8-1.36%
Live 24 hour Gold Chart
ʘ Giá bán lẻ xăng dầu
Sản phẩmVùng 1Vùng 2
RON 95-IV2486025350
RON 95-II,III
E5 RON 92-II2359024060
DO 0.05S1890019270
DO 0,001S-V1925019630
Dầu hỏa1779018140
ↂ Giá dầu thô thế giới
WTI$86.89-0.01-0.01%
Brent$88.70-0.17-0.19%
$ Tỷ giá Vietcombank
Ngoại tệMua vàoBán ra
USD22.470,0022.780,00
EUR24.775,4326.164,36
GBP29.663,4530.930,27
JPY191,46202,68
KRW16,2819,84
Cập nhật lúc 06:47:41 28/01/2022
Xem bảng tỷ giá hối đoái
binance main right Fxpro Main Right aetos main right adver main right