Key Takeaways:
- Turkish Lira has lost half its value against the U.S. dollar in the last 12 months.
- President Reccep Erdogan’s government plans to launch a gold conversion scheme to shore up the currency.
- But citizens prefer to invest into Bitcoin.
YEREVAN (CoinChapter.com) — Turkish Lira (TRY) crumbled 50% year-over-year and traded at 0.072 against the U.S. dollar on Feb. 21 following a period of relative calm. However, the Turkish government used the decreased volatility to make exaggerated claims, calling it “the strongest period in the history of Turkey.”
However, some analysts believe that Turkey’s President Recep Tayyip Erdoğan has been trying to “please the crowd” in the hope of an early election just as the country faces its worst inflation in two decades, hitting 48.7% in January 2022.
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For instance, Alp Coker, head of the GPW Consultancy’s Turkish desk, commented on the political advantages that Erdogan seeks to establish.
Holding things steady for a campaign period might be all he needs to win. Short-term solutions can work politically. It doesn’t need to work for a long time for it to translate into political success.
said the expert.
Erdogan has earlier fired central bank officials for even suggesting a hike in interest rates, believing that costly lending are the “mother and father of all evil.” He instead wants to take away citizen’s gold and convert them into Lira as a mean to curb inflation.
Bitcoin a safe-haven asset in Turkey?
It is unclear how long the Lira instability can last, so people look for alternative ways to hedge their assets. In detail, many choose to allocate their savings into the dollar. Others prefer gold, which rose 13% YoY against the persisting inflation.
According to a Financial Times report, the Turkish government has already dealt with five gold refineries. They will convert gold jewelry handed in by citizens into gold bullion. Then add it to the central bank’s reserves.
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Moreover, the government’s plan involves over 30,000 gold shops around the country. Allegedly, officials hope that 10% of the estimated $250 billion worth of private gold held by Turks will be handed over as part of the scheme.
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As Erdogan seeks to pursue a third presidential term, citizens of Turkey don’t trust the government to fix the crashing Lira. Instead, they seek to hedge their funds against the rising inflation and invest in alternative markets such as precious metals and cryptocurrencies.
