Lira’s New Low

In recent years, the Turkish economy has been encountering various obstacles like a trade deficit that’s continuously expanding, inflation that’s at an all-time high, and political instability. These difficulties have resulted in a decrease in the Turkish lira’s value and have caused investors to worry about the stability of the Turkish economy.

The ongoing challenges

Turkey’s economic struggles stem from its significant trade deficit, which is largely attributed to heavy reliance on imported energy and commodities. The resulting trade imbalance has put immense pressure on the value of the lira and raised concerns about Turkey’s ability to meet its foreign debt obligations.

Apart from the trade deficit, Turkey has been facing the challenge of high inflation. The inflation rate in the country has been influenced by both internal factors like government policies and increased food prices as well as external factors (the depreciation of the lira and high oil prices). As a result, the purchasing power of Turkish citizens has been declining, leading to social unrest and political instability.

Recent lows

The currency of Turkey, the lira, has been further weakened due to President Recep Tayyip Erdogan’s recent electoral win.

On Monday after the election, the Turkish lira hit a new all-time low against the US dollar, reaching a price of 20.08. This downward trend in the value of the currency has been ongoing in recent years, with a 7% depreciation already recorded this year.

The outcome of the elections has further fueled concerns among investors regarding the stability of the Turkish economy and political climate. With Erdogan’s continued rule into a third decade, effective policies are urgently needed to tackle the challenges facing the Turkish economy.

The Turkish people are facing both the depreciation of the lira and rampant inflation, leading to a significant decrease in their living standards.

Many experts predict that the country’s economic situation might worsen in the next five years under President Erdogan’s leadership due to his unconventional views on interest rates, central banking, and monetary policy. Specifically, Erdogan has been vocal about his belief that high-interest rates are the direct cause of inflation.

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