The Turkish Lira value improved against the bitcoin price ahead of an important conference between the country’s financial chief and global investors.
The BTC/TRY recorded a 22 percent drop since establishing its intraday high at 45382-fiat. A political spat between the Turkish and U.S. governments last week had influenced the latter to double the tariffs on Turkish steel and aluminum. As a result, the Lira value dropped to a record low of $0.139 on Monday, shaking an already weakening economy to further extent. The currency started to reverse its trend only on Wednesday when Qatar calmed the market by promising to issue loans worth $15 billion to improve the Turkish economic sentiments. The TRY/USD rose 6 percent in response to the decisive push.
The announcement of Berat Albayrak, the finance minister, addressing over 2,000 international investors further improved the fundamentals around Lira, influencing a 2.5 percent rise against the US dollar today.
Before that, Turkey’s central bank has initiated their response to improve the market’s condition by injecting liquidity for banks and imposing inflexible restrictions on currency swaps and similar foreign currency transactions. The impositions must have led people to opt for solutions that do not fall under the government’s jurisdiction, bitcoin being one of them.
Bitcoin a Sentimental Safe Haven
On the day Lira dropped, two of the most significant cryptocurrency exchanges in Turkey reported over 100 percent increase in trading volume. BTCTurk data showed more than 130 percent surge in the crypto volume, while Paribu data followed closely, stating a 107 percent growth within the same timespan. Since Aug. 8, the price of bitcoin against the Lira also surged by as much as 32.8 percent — almost three times the surge against the US Dollar.
The bitcoin price began to tumble against the Lira only after Qatar’s loan pledge announcement, indicating people are starting to take shelter under decentralized assets in times of political and economic crisis. Just recently, Iranian exchanges had also witnessed a surge in crypto volume in response to the authorities’ financial impositions. Before that, Venezuela, Zimbabwe, China, India, and Greece had also seen people flocking to cryptocurrencies when being subjected to capital restrictions, hyperinflation, and demonetization.
As far as the political and economic conditions of Turkey is concerned, the country was always at risk. Their deficits are increasing, their corporate debt is mounting, their inflation rate is also going north, and the Turkish government has refused to raise interest rates. To worsen the matters, the Turkish government has gotten into a cat-fight with Trump’s administration when it cannot afford it.
Holger Schmieding, a German economist, told the Guardian that Turkey could still avoid an imminent recession with a “swift and deft” policy makeover.
“So far, Turkey does not seem to be changing its policies fast enough, though. As a result, the risk is mounting that the Turkish economy may contract for a while,” he added.
The outcome of Albayrak’s interaction with the international investors, especially against the outside world’s unfavorable perception towards Turkey’s methods of handling the economy, could bring more clarity on the matter. But should the situation continue to get worse, the country’s libertarians would eventually prefer to park their money into non-government assets.
Let’s not be bullish yet!
Featured Image from Shutterstock
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Author: Yashu Gola