The Turkish currency has been under pressure for years, but especially in recent days the value has plummeted at a record pace. At the beginning of this month, 1 euro was still worth 11 lira. That is now more than 14 lira.
Money loses value
This ensures that everything that has to be imported becomes expensive, or even unaffordable, extremely quickly. Inflation in October, so even before the last fall of the lira, was already 20 percent.
In concrete terms, this means that a basket of groceries that would have cost 100 euros last year now costs an average of 120 euros. Or rather: 1680 lira.
Interest reduced instead of increased
The fall of the currency is a direct result of the economic policy of the central bank, which has been dancing to President Erdogan’s tune for several years now. Erdogan is a fervent hater of high interest rates and would like to see them fall.
The central bank therefore lowered interest rates last week. This ensures that borrowing becomes cheaper. The idea behind this is that this ensures more economic growth because it becomes easier to invest when borrowing is cheap. But that also makes more money available, which in turn leads to additional inflation.
Erdogan vowed to win the ‘economic independence war’, but for the time being citizens are hardly aware of it.
It is something that Turks are very concerned about, notes Pepijn Nagtzaam, who has been living and working as a producer for RTL Nieuws in Istanbul since the beginning of this year.
“It is bizarre to see how quickly the lira falls and continues to fall. In just a few months it has gone so fast. People notice this immediately in their wallets: prices in the supermarket, at the greengrocer and the butcher are rising, while salaries are lagging behind and are decreasing in value.”
No aid, but debts
“In addition, people are not immediately confident that it will be solved quickly. The corona crisis was hard here; many entrepreneurs had to keep their doors closed for a long time, without government support. keep their head above water, and pay a hefty interest on that,” continues Nagtzaam.
“Since this summer everything has finally been open again, money can be earned again, and now that coin is collapsing further. That is something that many people cannot afford. You also see many businesses that simply disappear from the streets; the broke.”
Meanwhile, many Turks choose eggs for their money. There are long queues at the exchange offices. Logical: because every lira in your wallet is worth less by the day, while euros and dollars are worth more.