The Turkish Lira has had a very bad month. The recent political escalation has further deepened the lira’s already massive headaches. Where politics are concerned there’s always trouble for many and opportunity for few.
I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!
— Donald J. Trump (@realDonaldTrump) August 10, 2018
In today’s day and age, information travels extremely fast and this single tweet by Trump, quickly managed to accelerate the lira’s decline.
One month ago the Turkish Lira was trading for around 4.80 to the dollar and it fell to around 6.5 on August 10th. This is the first time in history that it takes more than 6 liras to buy a single dollar. This is the direct result of the currency losing more than 30% of its value in less than a month, half of which was only lost last week. Turkish steel makes about 12% of the country steel exports. The move essentially removed Turkish steel from the American markets.
Even though back in May interest rates were increased to support the lira and President Erdogan’s urges towards the Turkish people to hold on to the currency, the lira seems to be in free fall.
This however, this allowed for an incredible growth in the Lira volumes on the Crypto Exchanges. Last Friday, CoinMarketCap saw an increase of over 100% at the Turkish exchanges. Btcturk, Koinim and Paribu each saw incredible growth. While the volumes of the exchanges may be small, the country’s largest exchange Btcturk still handles over $10 million in trades.
Erdogan’s speeches mentioning economic wars with the United States aren’t really doing much to raise the people’s trust in the lira. This is cause for concern since there are already talks about Turkey willing to follow Iran’s example and restrict access to crypto exchanges if they grow at “alarming” rates. There are also rumors about Turkish banks planning to end the support for customers trading with dollars. This will also include savings accounts.
A chain reaction started by such draconian banking measures can only lead to more distrust in the centralized currencies and banks.
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Tags:Btcturkeconomic warsErdoganIranKoinimliraParibuPresident Trumpsanctionssteel tariffsTradingtrumpTurkeyTurkish LiraUnited States