Turkey Bets Everything On Radical New Currency Policy

Turkey's economy has faced some serious problems over the past couple years. In 2021 their consumer price inflation exceeded 20% and their currency the Lira fell by more than 50%. To stem the fall in the Lira President Erdogan recently announced a new plan whereby savers can have their Liras protected from any future depreciation versus the US dollar. After this plan was announced the Lira rallied by almost 70%. In this video we go over what this new savings plan is and whether or not it can save the country's currency and economy.

#Wallstreetmillennial #Turkey #Inflation

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[glennalexon]

No, it's not an "ingenious plan", and no, the complicated and unpopular savings-account program did not cause the recent uptick in Lira / dollar. Turks already know they can simply keep their money in a USD account, and not bother with this new "synthetic dollar". The Lira improved because the central bank dumped a bunch of it's remaining reserves into buying Lira. They didn't announce it, but their foreign reserves account dropped by about six billion USD a few days before Christmas.

[afwaller]

Erdogan finally found someone smart enough to raise interest rates without “technically” raising interest rates, it is pretty risky though.

[JeremyAlpha]

Yes cause printing money makes it more valuable.

[koalabear]

You forgot to mention how their FX reserves have fallen off a cliff especially during the last week. The rebound in the Lira certainly had been significantly attributed to the intervention of the central bank.

[loberant]

Turkey manipulated the price of the lira last week. They used there foreign reserves to buy up the lira. I think they spent 6billion usd to buy the lira after the announcement to get people excited. I am shorting the lira again...

[binoymathew]

The policy unfortunately is bound to increase inflation, because the extra money that the Govt tries to compensate, will end up adding to the inflationary pressures and not take away from it.

[pirapatxie]

So they are subsidizing Lira's value with taxpayers' money, just with extra steps? How is that a genius plan?

[ishaankhandelwal]

In the first scenario, the lira will rise up and the people will get 13% interest rate. But the inflation rate is still 20%. So people lose out here. This in turn would result in low confidence and further downfall. In the second scenario, the government prints out more money which surprise surprise is even more deadly.

[baoboumusic]

All this does is postpone the crash by a year. Towards the end of this scheme, there will be an enormous pressure on the Lira and it will crash with a giant bang. Terrible, terrible idea.

[ErickOberholtzer]

Just kind of seems like a choose-your-own inflation adventure

[chbattchimeg]

Erdogan the guy who based his economic policies from islamic teachings, nothing can go wrong.

[nostro]

The liras rebound has nothing to do with this "plan". Turkey simply used its foreign reserves to buy more lira

[SafetyBriefer]

Betting on Erdogan to do something brilliant must have crap odds.

[fatfingergaming]

Thinking outside of the box is always considered desperate/stupid... unless it works. Then it's considered genius. 🤣

Definitely keeping an eye on this.

[bobthrasher]

The short term increase in value of the TL was completely an "insider" (Turkey based) manipulation of the currency to buy and sell TL and other foreign currency to make piles of wealth over night...The TL is back on a run up in devaluation over the last week. It has lost 3% to 4% a day since Monday...it went from 17 TL = $1 last Thursday (Before Christmas) to 10 TL = $1 in a 10 minute window of time and then went back up by 3 TL after that 10 minute window closed. This was a internal money making manipulation by Erdogan Insiders...they made billions in profit in foreign cash in just 10 minutes...

[ennd]

Why would i convert my dollars and wait for the government to reiumburse me, in a value they can easily manipulate if I'll eventually end up with the same amount? Inflation is expected around 30%, this means I'll definitely need the government money for the difference, so why bother? Why lock my money for 3 months ?

[phoenix]

Erdogan: Lower interest amidst inflation and devaluation pressures
Also Erdogan: Protect Lira valuation
WSM: He must be a genius!

[emrerothzerg]

This is not new. Turkey tried this method in 60s and 70s, it didn't go well and the inflation went up to 94%

[a.antoniou]

All will be revealed in good time, but this is gambling on a national scale. If they have used up their foreign reserves, how do they prop-up the Lira when it begins to slide again, which it will? Also, when the Lira invariably begins to slide, how will they compensate depositors?

[VMRDY]

Inshallah we have joined Pakistan in the failed states, failed economies and FATF grey list.