The Turkish Lira continues to face stern tests amid the worst national recession in the nation’s history. After it was reported days earlier that the Lira had become more volatile than crypto giant Bitcoin and had lost value against it, it has now re-gained advantage against BTC. This news was welcomed by the Turkish nation ahead of an important conference between the country’s financial chief and global investors.
BTC recorded a significant 22% drop against the Turkish Lira, since establishing it’s intraday high at 45382-fiat.
This comes amid a dead-lock between the US and Turkish government counterparts regarding the latter’s refusal to release American citizens and employees imprisoned in the aftermath of a coup attempt against now president Erdogan, back in 2016. This intense political spat has had adverse affects on the Turkish economy and the US government last week influenced to double the tax on Turkish steel and aluminum. As a consequence, it’s international trade market dipped severely and the Lira value dropped to a record low of $0.139 at the start of the week.
In the conference in Istanbul on Friday, with international investors, finance ministry chief Berat Albayrak tried to convince global traders to commit to the Turkish market and reinstate mutual confidence. It comes as good news to both entities that the currency started to reverse it’s trend since Wednesday, when Qatar calmed the market by promising to issue loans of worth around $15 billion to aid the saddling sentiment of the Turkish economy.
This announcement preceded an immediate 6% rise in the Lira’s value against the USD as a response to the incoming aid.
Albayrak’s speech to the conference addressed over 2,000 international investors that seems to have worked in good effect. At presstime, Lira’s fundamentals against the Dollar saw a 2.5 percent rise.
Bitcoin price only began to tumble against the Lira after Qatar’s intervention with a loan pledge announcement. This indicated that people were more or less content taking shelter under decentralized forms of assets in a time of political and economic unrest. Before, it has also been seen in Venezuela, Zimbabwe, China and Greece where people became fed up with the conventional fiat and adopted crypto as the governments were subjected to capital restrictions, hyperinflation and demonetization such as in India.
Previously, Turkey’s Central Bank had initiated their plan to improve the market’s condition by injecting liquidity for banks and imposing inflexible restrictions on currency swaps and foreign transactions. These limitations also served as a stimulus for the public to flock towards Bitcoin which was a solution free of the government’s authority.
Bitcoin still favored by public
However, Bitcoin does seem to be a mode of currency well in fame, among the Turks and seem generally satisfied by it’s stability and value. They quickly turned to crypto, when they felt at unease with the pertinent fiat and looked to become involved with digital assets at a larger scale.
At the peak of recession, last week, Forbes reported that Bitcoin and crypto trading volumes peaked on Turkey’s stock exchanges and surged further as the country looked to battle through crisis. Koinim, Turkey’s largest exchange reported a 63% increase in Bitcoin trading volume, while the BTCTurk and Paribu exchanges have reported their volumes to be up by 35% and 100% respectively.
Since August 8, the price of bitcoin against the Lira also surged by around 32.8%, which was almost three times the surge against the US dollar.
One bitcoin user in Istanbul who goes by a pseudonym, Bitmov, told that he has been using bitcoin to buy digital ads abroad for over three years.
I started personally trading crypto 1.5 years ago because of the weakness of the Turkish lira, and fear of the political, and financial, status of the Turkish government and cryptocurrency makes me feel much safer.
According to Google Trends, interest in Bitcoin increased markedly as the Turks seemed to have thrown in the towel on the Lira, amid it’s continuous decline since Erdogan took office. Even consistent calls to the general public to convert their considerable foreign exchange reserves to support the Lira depleted quickly and seemed to fall to deaf ears. The public clearly did not want to give up their personal belongings to support their national currency.
This intermediate approach from the nationals helps Bitcoin’s credentials on the nation’s financial setup. Comparatively to Iran, where ban on bitcoin and crypto-trading means those willing to buy bitcoins must turn to peer-to-peer exchanges like LocalBitcoin, banks in Turkey often still work with local exchanges. This encourages fresh adopters of crypto into buying and trading easily.
Lira to remain Buoyant?
The political and economic stealth of Turkey does not seem to be getting far better than it already has. It was always under this risk of deficits, as their corporate debt has been on the rise since long and inflation rate has been stretching from the South to the North pole.
Moreover, the spat with the US government certainly makes matters worse. The administration simply cannot afford it. The president has played bullish over the country’s prospects of self sustainability, not accepting US sanctions and boycotting the world power themselves.
Holger Schmieding, a German economist, wanted Turkey to give up stern policies and play according to how the scenario unfolds. He told the Guardian:
So far, Turkey does not seem to be changing its policies fast enough. As a result, the risk is mounting that the Turkish economy may contract for a while.
Albayrak’s interaction with the financial representatives of the world, coupled with Qatar’s promised loan may have helped the Lira rise above Bitcoin, but it is yet a small victory. The president’s firm stance against the US and pertinent sanctions do not seem to help diffuse the situation soon enough and should the situation continue, the country’s financial spearheads and other libertarians would eventually feel no discomfort in moving their money into non-government assets. Thus, there is great possibility that the good work that’s been done, could yet be wiped off.
Patience is key, in this one.