Pardon the Oxymoron but it looks like Turkey’s president’s displaced relationship with cryptocurrencies may have come home to roost.
Turkish Lira Free-Falls, President To Blame
While Turkey’s leader might have resentment towards cryptocurrencies, it faces an even bigger problem according to Bluebay Asset Management’s Timothy Ash. “Insane where the lira is, but it’s a reflection of the insane monetary policy settings Turkey is currently operating under,” he tells CNBC.
At reporting time, the Turkish Lira continues to lose strength against the Dollar. In the last week, it has lost over 40% and over 1000% in value since 2008 dropping to a record low of 12.94 to the Greenback. This comes even as forex traders rekindled their hope upon the currency, finding some resistance along the $9.8 region.
This week’s sell-off was further exacerbated by President Tayyip’s defense of the country’s central bank’s decision to keep interest rates low on Tuesday despite the country falling into the abyss of double-digit inflation.
Tayyip’s government has continued to ignore calls from investors to deflect from its current course, throwing the country into economic chaos even as he continues to defend his “economic war of independence” rhetoric.
“We need to abandon this irrational experiment, which has no chance of success, and return to quality policies that will protect the value of the Turkish lira and protect the welfare of the Turkish people,” says Semih Tümen, a former MPC Member of the Central Bank of Turkey.
Turkey’s inflation has hit an all-time high of 19.58% with the cost of basic food items and salaries becoming untenable for its citizens.
Turkey’s Rollercoaster with Cryptocurrencies
Turkey has had a dark history with cryptocurrencies under President Tayyip. In September the head of state declared a full-scale war on cryptocurrencies, interestingly, during a meetup with university students.
He had noted that his government did not intend on opening up to cryptocurrencies despite launching a Digital Lira platform. “On the contrary, we have a separate war, a separate struggle against them,” he had said.
Earlier in May, the president had also issued a decree against the nascent market, directing that cryptocurrencies should forthwith be classified under terrorism and anti-money laundering laws.
The decree saw authorities intensify the crackdown on digital token issuers and traders in the country, throwing Turkish nationals for a loop even as they continued struggling with sky-high inflation.
Despite these pushbacks, interest in cryptocurrencies by nationals continues to surge as more citizens are increasingly buying the assets to cushion themselves against inflation.
Michael Saylor notes that Turkey’s economy has been subject to its currency woes due to its leader’s highhandedness, advising that Turkey’s best bet is to take the El Salvador route.
“If you want to survive, convert your working capital from TRY to USD. If you want to thrive, convert all your capital from TRY to BTC,” he says.