Page 16 - TURKRptFeb22

2.3 Lira
Erdogan’s son-in-law Berat Albayrak is the patent-holder of the idea of using currency interventions to place pressure on the USD/TRY rate with the objective of inducing FX-holders into panic sales.
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.
Following a “cabinet” meeting (the supposed “cabinet” is not actually a cabinet) on the evening of December 20, Erdogan announced the new instrument that guarantees lira deposits against currency depreciation versus hard currencies.
Simultaneously, some invisible fists attempted to knock some chunks out of the USD/TRY rate. The pair closed the day at 13.51, after a fall of 26% within a few hours, and saw as low as 10.16 on December 23, a rate that translated into a 45% strengthening within three days. At end-2021, the rate stood at 13.30, up 31% w/w.
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.
New measures
- The Treasury will provide a guarantee against lira depreciation to lira deposit holders. At the end of maturity, if the USD/TRY yield is higher, the Treasury will pay the difference.
Banks are able to offer an interest rate between the policy rate of 14% and plus 3pp (17%) for maturities of three, six, nine & 12 months.
16 TURKEY Country Report February 2022 www.intellinews.com