Turkish Lira currency crisis update. I hope that nobody decided to short the Turkish Lira because it has suddenly gained 25% within hours as strong man Erdrogan promised to defend the currency to the death!
I wrote earlier this week about the Turkish Lira and how it was losing value – over 50% year to date. Bad news for anyone holding Lira.
Well, I posted too soon and since then, the currency has dropped from £1 = 24 Lira to around 15 now!
That’s a huge correction in just a few days.
Why did it happen?
Reuters says “measures proposed by President Tayyip Erdogan and the Turkish central bank to guard local currency savings” and ominously “Erdogan introduced a series of steps on Monday that would shift the burden of a weakened currency to the Treasury and encourage Turks to hold lira rather than dollars.” Over half of cash holdings in Turkey are held in other currencies (USD $ and Euro €) and Gold due to perceived weakness of the Lira.
Will shifting the burden from the people to the treasury do the trick? I am not sure. I don’t bet on currencies (because I’m not stupid and I don’t want to lose money – Forex is a mug’s game) but I’m sure people have made (and lost) big time on the Lira. To gain about 40% in value in less than 1 week is insane for a currency – it’s a wild ride and we don’t know what’s actually happening, what’s going to happen next or when. But whatever it is, this ride ain’t over yet and there will be people betting big bucks that they can destroy the Lira and take with it the Turkish treasurer, government and possibly the state.
Funnily enough, my original blog post got a few more readers who are not the typical readers – more finance/economics than personal finance BUT not a single reader from Turkey!
It makes you wonder one of two things:
- 1) Bald Borat lookalike Erdrogan is blocking information coming into (and out of) the country
- 2) My blog is just plain rubbish and not in Turkish so not that readable.
In any case, I’d like to see if this one could be read because I’d like to hear from some Turkish voices on what’s going on. Anyway, Merry Christmas everyone and don’t lose money!