Cautious Turks in the face of fluctuations in the lira

The lira reached a record low against the US dollar on Monday, but recovered again, reaching a record high on Tuesday morning. The Turkish lira has been depreciating since the country’s central bank began lowering interest rates in September, despite rising inflation. The weakened lira raised consumer prices, with many finding it difficult to afford food and other basic necessities.

Turks and tourists waited in long queues outside exchange offices on Tuesday as the Turkish lira strengthened after record lows.

Turkish President Recep Tayyip Erdogan unveiled a series of measures late Monday, which he said would ease the burden of a weakened currency on Turks and encourage them to keep the lira free instead of dollars.

Expressing concerns about insecurity, some Turks seeking to buy US dollars waited in line outside exchange offices.

“Some people are probably convinced (with the last steps) and have exchanged their dollars for Turkish lira. But we do not know how long it will last, everything remains uncertain. The decision of the United States is not yet known, interest rates are rising everywhere in the world. Government steps are a kind of masked increase in interest rates“, Says a pensioner in Istanbul.

Under Erdogan’s plan, his government promised to guarantee deposits in lira, causing the currency to rise by about 25% on Monday, its largest overnight increase in history.

The Turkish currency, which has lost 44% of its value against the US dollar this year, initially strengthened on Tuesday to a daily high – 11 lira per dollar, later weakening to 14 lira before stabilizing at 12.6 cheap against a dollar.

“The uptrend has stopped and is fluctuating again. When I left home, a gram of gold was 700 lira, now it is 803 lira. The lira was 11 against the dollar, now it is 15. What they did with these measures was to take the money of poor people from accounts in dollars and gold and make the businessmen richer“, Says Salim Kart, a self-employed person.

The government has pledged to pay the difference between the value of savings in lira and equivalent deposits in dollars.

According to central bank data, more than half of Turks’ savings are in foreign currencies and gold, due to the loss of cheap confidence, which has depreciated over the years.

The lira has fallen to record levels this year amid fears of rising inflation caused by lower interest rates by the Bank of Turkey.

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