Is Turkey entering a currency house of cards? - analysis

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Is Turkey entering a currency house of cards? - analysis
Turkey’s leader Recep Tayyip Erdogan referenced “Islam” as an answer to the currency troubles earlier this week. He wanted to keep interest rates low in the name of religion.
By SETH J. FRANTZMAN
Published: DECEMBER 22, 2021

Turkey’s currency, the lira, has been on a roller coaster over the last month. It began December at roughly 13.30 to the dollar and is now at 12.25. That sounds good. The currency is stronger. Except the real picture is that a year ago it was around 7 to the dollar and this month it reached a peak of 17 to the dollar, meaning it is fluctuating wildly and it has lost a lot of value. This is bad news for the middle class in Turkey. The current ruling party, the AKP, came to power almost two decades ago partly on an economic platform. Although the party is a far-right Islamic party that is increasingly populist and authoritarian, its economic credentials appealed to many average people.

Today that reputation is in tatters. However, the party has drawn on various methods associated with 1920s and 1930s era fascism to stay in power, including viewing the economic battle as a battle against “foreign” enemies. Turkey’s leader Recep Tayyip Erdogan referenced “Islam” as an answer to the currency troubles earlier this week. He wanted to keep interest rates low in the name of religion. Religion and economics don’t usually mix well. But this time Turkey appears to have succeeded, at least temporarily. The problem with the recent swings and volatility is that there is a lack of clarity over what Turkey is doing. Has it merely bought the country time, or is this a new feature of the economy?

more............... https://www.jpost.com/business-and-innovation/banking-and-finance/article-689491
 
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