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The Turkish lira has depreciated more than 40% so far this year against the US dollar, causing an unusual increase in consumer prices. President Recep Tayyip Erdogan believes that this is speculation in the currency market.
The currency crisis in Turkey has led some citizens to think of an unorthodox form of investment: acquiring electronic products in the hope of selling them more expensive in time and thus obtaining a return.
A sales representative at an Istanbul Apple store, who requested anonymity, said “It’s pretty surreal, but people see it (the investment) as a store of value and they flock to the stores. They know they’ll be able to sell it a little bit. year later for more than they paid. “
Turks who tried to buy iPhones and other electronic devices encountered error messages on Wednesday, including from the local Apple Inc. website, Reuters reported, after a historic 15% drop in the lira last Tuesday that wreaked havoc. in prices.
Although the Turkish local currency recovered strongly on Wednesday, the truth is that it has lost more than 43% of its value this year and around 20% since the beginning of last week alone.
Turkey’s Erdogan wants a cheaper lira to unleash the animal spirits of the country’s businesses. But the extreme currency swings unleashed by his war on interest rates are for now having a chilling effect https://t.co/3ExtwLPFsg
– Bloomberg (@business) November 24, 2021
In turn, goods priced in local currency have seen a sharp decline compared to prices elsewhere and retailers are struggling not to make a loss amid the market turmoil.
For example, local prices for phones and computers were about 10% below US prices on Wednesday, following the sudden depreciation of the lira.
A monetary policy that goes against the rest of the world
The Central Bank of Turkey is one of the few – if not the only one – in the world that, to combat high inflation, has decided to cut its interest rates, a measure that President Recep Tayyip Erdogan defends despite widespread criticism. .
On the contrary, central banks around the world are reducing the massive monetary stimulus introduced during the pandemic. In Asia-Pacific, South Korea and Singapore have also tightened their policies in recent months as inflationary pressures mount. The market now expects the United States to do the same.
Erdogan, while defending low interest rates to boost the economy, promises to “crush” those who use “the foreign exchange market as a false pretext” to raise prices. Many economists have described the rate cuts as reckless.
With Reuters, EFE and AP
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source https://pledgetimes.com/economy-no-iphones-available-this-is-how-turkey-fights-against-extreme-devaluation/
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