Turkey is doing again what it failed to do last year.
In 2020 it had pursued the same goals: to keep interest rates artificially low and single-digit while keeping the Turkish lira stable.
That policy cost her $ 128 billion during Treasury Secretary Albayrak's tenure.
At that time Turkey burned a large part of its foreign exchange reserves.
Today it is repeating this failed policy: it pushes the interest rate to an extremely low level and at the same time tries to stabilize the currency. The only difference is that this time the Treasury Department pays the costs. This attempt will also fail. This is because inflation, which is already high, is accelerating, and no other country has such a high negative real interest rate. A double-digit inflation rate is expected for December alone.
However, Erdogan wants to push the key rate even below 10 percent.
So if you invest in Turkish lira, you lose a quarter of your money.
This is not an incentive to invest in lira.
And the looser monetary policy becomes, the more money the central bank will print, which the state banks will then hand over at negative interest rates.
It is invested in gold and real estate, which will fuel the real estate boom but will not create any jobs.
As long as Erdogan sticks to his policy, the lira will remain volatile.
Also in the coming year.