Turkish Lira, Free Fall against the Green-Back, anew

Apple, in Turkey, said decision to suspend on- line selling of its gadgets, has gone viral.

The meaning is simple: We don’t accept payment, in the Turkish Lira, pending re-evaluating the , ,prices, to accommodate the new normal rate of exchange, if any, is looming

It was against the backdrop of the Turkish currency free fall before the dollar, anew, is among various related developments that take us, to retrospectively re-read the Turkish Lira ongoing tragedy, over and beyond.

Perhaps August 10, 2018, will remain stuck, in the minds of Turks, for a very long time, as it is considered a black crush day for the Turkish Lira.

On the day, it plunged, in several hours by more than 16%, after a series of declines that pushed it to decline by 40%, during the year, before a slight rising to claim part of its big loss.

Turks were counting, at the time, on bringing about a boost to the economy, which seemed to show signs of weakness, affected by Turkey’s foreign policy and strained relations with many international parties.

However, this desired improvement quickly dissipated after signs of a crisis appeared on the horizon.

Relations with the United States of America were made worse, after the Turkish authorities arrest the of an American priest, on charges of espionage and aiding a military coup d’état, a move that necessitated a violent response by US President, who immediately doubled customs duties on steel and aluminum imports from Turkey by 50 % and 20%, respectively, especially that Turkey is one of the largest steel exporters, in the world.

Where the value of Turkish iron and steel exports amounted to $11.5 billion, representing 7.3% of the Turkish total exports’ revenues, the share of the United States stood at $1.1 billion

Fear and anxiety over the future of the Turkish economy, exposing the Turkish Lira, and keeping pushing, down under, to much free fall against the bucks.

Investors are exacerbated by the strong divergence, in attitudes between the Turkish Central Bank and the President, who is vowing to fight raising interest rates, contrary to the vision of the Turkish Central Bank, instead he is exhorting the Turks to support the falling and depreciated Lira and sell their re-evaluated dollars.

Turkish Central Bank has mildly intervene, in order to raise interest rates, at the time, to prevent further collapses of the Turkish Lira, but it was much more than too little and too late, as the national has collapsed.

Perhaps the economic aftershocks of the Turkish Lira, collapse, in 2018, are fatal blow to the Turkish economy, as it led to a contraction in the dollar-denominated GDP, during the Q3 of that year, and contributed to the rise in the cost of borrowing to unprecedented levels, for a long time and wreaked havoc in the purchasing power parity of the Lira and sent a shock to global stock markets, due to the fear that European banks would be exposed to Turkish debts, amounting to about $457 billion, they owed the Turkish companies, including $171 billion, mostly to Spanish, French and Italian banks, which have the lion share of those debts.

The decline of the Lira also caused a shock amid foreign investors club, as they were betting on investing, in the Turkish market, however they end bearing huge losses, resulting from the collapse of the value of the national currency, in addition to their fear of the future of the Turkish economy, due to the horrible decline, in investor confidence index.

Although the Turkish Lira has managed, since, to consolidate against the dollar, during the last quarter of the previous year and the first quarter of this year, the re-regression of the value of the Lira against the dollar, since the beginning of March 2019, has pushed its level more than doubled, sending warning of the possibility of further decline and indicating that the direction of investor confidence, in the economy is rapidly scattering, again, if not, outright, evaporating.