Page 17 - Turkey Outlook 2022

6.0 Markets outlook

6.1 FX

Latest lira “blockbuster”

The Erdogan regime always makes interesting choices. Since December 20, it
has again been burning wildly through the reserves.

Erdogan’s son-in-law Berat Albayrak is the patent-holder of the idea of
“pressing on the USD/TRY rate and pushing FX-holders to panic sale”.

When Albayrak became finance minister on July 10, 2018, the USD/TRY rate
stood at 4.71. Its latest all-time record low was registered on December 20,
2021 at 18.37.

On the evening of December 20, the Erdogan regime staged a new lira
“blockbuster movie”. Following a “cabinet” meeting (the supposed “cabinet” is
not actually a cabinet), Erdogan announced a new instrument that guarantees
lira deposits against currency depreciation. We are not going to dig into the
details of this instrument here as it is simply a “troll” and does not make much
sense.

Simultaneously, some invisible hands brought pressure to bear on the
USD/TRY rate. The pair closed the day at 13.51 and saw as high as 10.16 on
December 23. Towards the end of December 31, the rate was around 13.25.

After the announcement of the instrument, a media campaign was launched to
portray Erdogan as slaying the USD and citizens as rushing to sell their
dollars.

Pro-Erdogan media that buy into the idea of Erdogan waging a “war for
economic independence” with a new unconventional economic strategy
represent the FX-guaranteed lira instrument as the “rabbit pulled from the hat”.

Where the purported economic brains of the Erdogan regime are concerned
(with the boss to the fore), it is a waste of time to mention the destructive side

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