Turkey, inflation rises to 36%. Ankara requires companies to convert a quarter of their foreign revenue into lira

The Turkish lira opens the new year as the old one ends: the fall and with the currency crisis that risks twisting and quickly collapses. Today the data onInflation in December reaches 36% (from 20% of the previous month) to reach the highest level in the past 19 years. Much higher than expected. During 2021, the lira lost 44% against the dollar. This mode pays Debt issued in foreign currencies is very stressful by Turkish companies and generates an impact “Import inflation”. In fact, all products that come from abroad cost more, which reduces the purchasing power of those who have income in the national currency.

Three weeks ago the chief Recep Tayyip Erdogan Emergency measures to try Protecting the savings of Turkish citizens. In essence, the state undertakes to compensate for any difference between the loss in the value of the lira and Interest rates paid on bank accounts. It is a measure which has the effect of influencing the public accounts of the country which, at least for the time being, does not show any particular importance. The announcement had the effect of a temporary reversal of the lira’s decline, as the rally was favored by a Massive intervention from the Central Bank of Turkey Those who sold dollars and bought lira.

However, last week the Turkish government called on citizens to Deposit gold in national banks and keep deposits in national currency only. The order that led to the file coin jingle. Instead, Ankara announced today that Exporting companies will be required to convert a quarter of the revenue generated abroad into lira (hence in foreign currency). The transfer will be managed by the Central Bank which increases the availability of valuable currencies such as dollar or euro.

All of these measures are put in place for Inability to raise interest rates, a move used by all central banks as a first remedy against currency depreciation and inflation. President Erdoğan firmly opposes this provision which he has Side effects of slowing economic growth. The Turkish central bank is influenced by the government and the past few years have been marked by the return of conservatives. Those unwelcome to Erdogan were quickly replaced. Elections will be held in 2023 That the president aims to win. But for the first time, opinion polls show that opposition forces are ahead of the ruling party.