[Look at China December 20, 2021]Tragic, quite tragic.
Anyway, for Turkish investors, this is an unforgettable Black Friday. On December 17, the foreign exchange market plummeted and the stock market plummeted. Many people’s lives were liquidated within a day.
If this is a tiny economy, the impact may be limited. But Turkey is also a big country at any rate and the largest economy in the Middle East. In the past few years, it has become more ambitious diplomatically and intends to restore its former Ottoman glory.
Just in the past December 17th, everything that happened was thrilling…
Let me talk about the Turkish foreign exchange market first. The Turkish currency lira against the U.S. dollar fell below the two round mark of 16, 17 in a row that day, and fell to 17.14 lira to one U.S. dollar at the lowest point. Since the beginning of this year, the Turkish lira has depreciated by about 55% against the US dollar.
Can you imagine such a depreciation of the yen and the euro?
Don’t even think about it, but it happened in Turkey.
When the Turkish Central Bank saw that something was not going well, it quickly dumped the US dollar to save the lira. After all, this is already the fifth time that Turkey’s central mother has made a move this month.
Intervention on the 1st, 3rd, 10th, 13th, 17th…
Not intervening, the consequences will be more serious, but even so, the Turkish currency depreciated by 5% on the 17th.
The currency is depreciating and inflation is inflating.
Turkey’s CPI in November rose by 21.31% year-on-year. According to economists’ estimates, this is not the end, but a new beginning. Turkey’s inflation may exceed 30% next year. The Turks watched their bills shrink and their incomes fell. What should they do?
The Turkish government came up with a “good solution”: processing capital.
On December 16, Turkish President Erdogan announced that the monthly minimum wage in Turkey in 2022 will be increased by 50%. It will be 2826 lire in 2021 and 4253 lire in 2022.
Income easily increased by 50%, don’t you worry? But pitiful, last year’s 2826 lire was about US$380; next year’s 4253 lire is estimated to be more than US$200 at most. Has the income of Turks increased or decreased?
According to reason, inflation has increased, so raise interest rates quickly. But Turkey is afraid to raise interest rates. It’s very simple. Once interest rates are raised, the economy will get worse. In fact, Erdogan believed that it was high interest rates that caused high inflation and severely affected Turkey’s exports and economy. Under his strong pressure, the Central Bank of Turkey has cut interest rates by 500 basis points since September this year…
Erdogan: How to deal with the continuous devaluation of the Turkish lira? (Web picture)
As a result, the depreciation of the lira intensified and inflation continued to inflate.
What do people do?
The stock market once became a safe haven, and the Turkish stock market has indeed been rising recently. But on December 17, fear also overwhelmed the stock market. When the market opened, the stock market was still rising, and suddenly plunged in the afternoon, so that within the last hour, two circuit breakers were triggered and the whole market stopped trading.
At the end of the day, Turkey’s main stock indexes closed down 8.5%, the biggest one-day drop since March.
To sum up, on December 17, what a thrilling day:
The Turkish currency has depreciated by 5%; the Turkish stock market has plummeted by 8.5%; Turkish inflation is currently above 20%…
What makes people feel sad is that just a few years ago, the Turkish economy was booming. I remember that when the BRIC countries expanded their capacity, some Turkish friends thought that Turkey was actually the most suitable, at least more suitable than South Africa, because of its economic size. In terms of development potential, Turkey is much better than South Africa…
But this is the glory of the past. In recent years, Turkey’s diplomatic and military activities have been super active, but it has become “super bright” economically.
Anyway, with Western sanctions, the Turkish stock market and foreign exchange market plummeted; Erdogan replaced the governor of the central bank, and the Turkish stock market and foreign exchange market plummeted…
Since 2019, Turkey has changed three central bank governors. A small drop in three days and a big drop in five days, the lira has fallen into a dog now.
The income of ordinary people is shrinking. I just saw the last sentence of an Associated Press report, and I sighed like this: The continuously depreciating lira has led to soaring prices in Turkey, and the prices of imported goods, fuel, and daily necessities have become more and more expensive. Among the country’s 83 million people, many people are doing it. Struggling to buy basic items such as food…
For emerging economies, development is the key to solving all problems. No matter how ambitious a country is, if the economy fails, the people will definitely suffer the most.
Of course, after long-term development, Turkey still has some wealth, and there are still more or less opportunities for change. But no matter how solid the family is, it cannot withstand repeated toss. If things go on like this, it is difficult to say that politics and society will not go wrong.
For Turkey, the nightmare continues, but this is certainly not the worst time…
Editor in charge: Yu Zhen
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