In those moments of trading on Monday, the Turkish lira reached 18 lira / dollar for the first time in its history, with a decline of more than 10%.
The lira recorded a low of 18.1675 pounds / dollar, hitting a new historic low and stopping the trading of the Istanbul Stock Exchange for the second session in a row, after the losses of the key index crossed the 5% barrier.
In contrast to the violent decline of the Turkish lira, the price of one gram of Turkish gold rose more than 11% to an all-time high of 1060 lira / gram.
Urgency: A state of panic is hitting the markets
Historical declines
The Turkish lira has fallen more than 23% since the last interest rate cut on December 15, falling to the current level of 14.7875 lira / dollar.
The Turkish lira fell more than 35% during December trading, down from 13.4732 lira / dollar at the close of trading on November 30.
Since the beginning of the year, the dollar has risen more than 144% against the lira from 7.4320 pounds at the end of December 2020 trading, the highest level in those moments.
Urgency: A new Turkish decision
Crazy heights
On the other hand, the price of gold in Turkey has been rising madly since the historic collapse of the Turkish lira, as between the collapse of the lira and the acceleration of inflation the gold hedging seemed to have found what the Turks wanted.
Gold prices in Turkey have risen by about 290 pounds per gram since the beginning of December, from the current level of 770 pounds per gram to 1060 pounds / gram above current levels.
At the end of December 2020 the price of the flame was about 454 pounds per gram, which means that the gram price had risen above 600 pounds, an increase of more than 120%.
Urgency: Non-stop decline .. Comment did not stop him
Violent pressure
The fall of the Turkish lira has prompted Turkish President Recep Tayyip Erdogan to move forward with what he calls the “economic war / and the new economic model that combats the high interest he sees as a monster.”
Erdogan supported the decision to cut interest rates and Turkey will succeed in controlling high inflation through lower interest rates as the rate has been cut by 500 basis points since September.
Recently, Erdogan sacked three Turkish central bank officials, while appointing Nordin Nabati, the new finance minister, to replace Ludfi Elvan, the last opponent of Erdogan’s policy of reducing interest rates.
Urgency: Severe landing
The central bank has intervened in the currency market five times in the past two weeks, selling dollars to ease the lira’s depreciation and absorb already declining foreign exchange reserves.
“Sooner or later, as I did when I came to power, we will reduce inflation to 4%.
Erdogan’s comments Erdogan said the new policy, based on lower interest rates, was “part of the war on economic freedom” as the annual inflation rate reached 21 percent as a result of the president’s attempt to deflate the lira. ”
On the other hand, economists and Moody’s and Fitch see this policy as “irresponsible” and expect inflation to rise to more than 30% next year.
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