The effect of Turkish Lira Collapsion on the Economy
In this article we will talk about The effect of Turkish Lira Collapsion on the Economy .By observing the charts of the US dollar against the Turkish lira, which extends over a one-year time frame. With the dollar being the number one or base. currency in the USD/TRY currency pair, the sharp rise on the chart shows the dramatic weakening of the lira against the dollar.
High inflation and low-interest rates
concerns about rapidly rising inflation. in Turkey have not been addressed by corresponding increases in interest rates by the country’s central bank. The central bank was pressured to maintain low-interest rates by refraining from implementing much-needed increases.|The low-interest-rate environment contributed to the continued pressure on the Turkish lira.
The possible debt crisis in Turkey’s .huge exposure to other countries is reflected in a very large proportion of foreign currency-denominated debt. As the Lira continues to weaken, Turkey is becoming increasingly difficult, costly, and exacerbating the depreciation of its currency. The impending debt crisis is likely to. be accompanied by. Turkey’s request for assistance and the bailout of the International Monetary Fund, which could have a .significant impact on the European and global economies. Turkey’s huge current account deficit increases the country’s chances of a serious debt crisis. However, the global threat posed by Turkey’s debt problems is relatively small. According to the Bank for International Settlements, the global exposure to Turkey’s lending is the US $265 billion, less than 1% of the world total.
However, Turkey’s debt crisis can have unpredictable consequences in already volatile regions. Impact of Turkish Lira on Money Markets, Attempts have been made to stop currency losses by encouraging Turkish citizens to use foreign exchange and gold to buy lira and wage economic wars with other countries.
The effect of Turkish Lira Collapsion on the Economy
However, this attempt to arouse public enthusiasm to protect the Turkish currency was not immediately successful. Lira continued to be under pressure after the fall against the US dollar.
Regardless of the impact of Turkey’s potential debt crisis on European markets and financial institutions, it can have synergistic effects on other global markets. The drop in the lira is also important because it helps further depress the euro, which has already become weak, and boosts the United States. The dollar was rising sharply for most of the previous year
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