History of the Turkish lira’s meltdown against the dollar – the final part

According to the international group Tasnim news agency, as in the opening section We have mentioned this, these days and in the first station of 2024, there are only a few koros until the US dollar in Turkey reaches 30 lira.

This is an unprecedented rate in recent decades. Is. But checking the records of Turkey’s economic history shows that before 6 zeros were removed from the country’s banknotes, the value of each US dollar was even higher than one million!

In 1923, in the first year of the establishment of the Republic of Turkey, every dollar was less than 2 lira, the lira gradually became thinner and in the years when, in addition to the economic recession, political events and widespread insecurity such as coup d’état affect the market.

For example, after the 1960 coup and the execution of the then Prime Minister Adnan Menderes, Turkey entered an economic black tunnel and every 1 dollar in this country, The incredible price of 9 lira arrived. In 1970, during the government of the Justice Party led by Suleiman Demirel, the lira became a weak currency with a 65% drop in value, and the dollar went from 9 lira to 14 lira and 85 kuroush.

Turkey had just gotten used to Suleiman Demirel’s policies when again in 1980, the generals came to the field and the coup of General Kanan Oran again brought the country’s market to the brink of collapse.

Turkey market’s painful farewell to the 20th century

After Turgut Özal came to power and declared compliance Turkey’s free market policy caused 80% inflation, and in 1989, one US dollar even exceeded 2,300 Turkish liras, but it was not enough and in 1994, during the government’s rule, Tansu Chiller-Morad Kara Yalcin coalition, the value of every 1 US dollar reached 40 thousand lira.

The last decade of the 20th century in Turkey was the decade of weak foundation coalition governments, and many times Chiller, Erbakan , Yilmaz, Ejwit and others, tried their luck to form a stable government and did not get results, and by 1999 the dollar rate reached 314 thousand 230 liras and broke a new record.

By entering the year 2000, the bells of crisis rang again in the Turkish economy. In the framework of the program initiated by the International Monetary Fund (IMF) to reduce inflation, the fixed exchange rate of It was implemented in 1999.

Central bank every day currency rate was declared constant and the interest rate was determined by the market. The first crisis started on November 22, 2000 due to the liquidity problem in the market. As new problems in the Turkish market worried foreign investors, a large amount of capital was withdrawn. The interest rate exceeded 1000 percent overnight in the interbank market. The central bank temporarily stopped the crisis by financing the market with the support of the International Monetary Fund. He hit the law book on the head of the prime minister

at the end of the 3-year period in which the coalition government of Ejvit-Yilmaz-Baghceli was formed and from the election It was 1999, the problems in the banking system and party and political conflicts caused the famous crisis of 2001. After that, there was a big crisis when the rate of one US dollar reached one million and 642 thousand liras! /Uploaded/Image/1402/09/07/1402090716335130328869594.jpg”/>

On February 19, 2001, the then president of Turkey, Ahmet Necdet Sezer, who is a famous jurist and a well-known judge At the meeting of the Supreme National Security Council, he got into a fight with Prime Minister Bulent Ejvit.

Sezer threw the book of the Turkish Constitution at Ejvit and had such a good aim that it hit the middle. He hit his forehead! “There is a crisis in our country,” Ejvit announced to reporters waiting outside the meeting. The Prime Minister threw. (In the old days, the shops had a cash box with a button, in addition to placing bills and coins in it, they had the possibility of registration). Turkey’s economy lost its psychological balance. So that on the same day more than 7 billion dollars in foreign exchange demand was created and the overnight interest rate in the interbank market reached the range of 5,000 to 7,500 percent!

Since it was not possible to respond to the high demand of foreign exchange due to the rapid withdrawal of foreign investors from the market, the regime of currency rate Fixed changed to floating currency rate regime from February 21. The dollar rate, which was set by the central bank at 684 thousand liras before this decision, even exceeded 1 million and 200 thousand liras with the transition to a floating rate.

Kamal Darvish’s version

The critical conditions of Turkey’s economy were strongly noticed by international institutions and work to It reached a point where America and NATO considered the danger of Turkey’s collapse as probable. It was at such a time that a Turkish economist living in America came to Turkey and took the helm of the economy as a minister with full authority. His name was Kamal Darvish and he had a credit It was international. Kamal Darvish paved the way for giving several large foreign loans to Turkey and gradually peace returned to the Turkish economy, and without a doubt, the government that emerged from the Justice and Development Party in 2002 was not a ruin, but a settled and reformed economy.

Ali Babajan, the young minister of Erdoğan’s cabinet, implemented the order to remove 6 zeros from the Turkish lira, and in this way, 1 million lira became 1 lira. This action, at least, had a significant impact on the psychological conditions of the Turkish market.

Two different decades

According to experts and commentators who have followed the events of the 23-year history of the Justice and Development Party, this party performed well and It was acceptable.

Production went up, positive things happened in important sectors such as tourism and transportation, foreign capital entered the Turkish market in abundance, a strict financial order on all The executive organs of the country were empowered and the way was closed to any kind of corruption and in a competitive and transparent environment, the Turkish economy came to life and the lira became stronger and more muscular day by day against the dollar.

But in the second decade, we are witnessing the decline of the Justice and Development Party. So that the experts believe that Erdoğan’s totalitarianism, single-mindedness and wrongful interference in various institutions caused great damage, but 3 institutions suffered more than others:

1. The central bank whose independence was lost in determining monetary and financial policies. In addition, Erdogan’s close comrades took control of large banks, and for example, Erdogan’s favorite sportsman and hero became a member of the board of directors of a large Turkish bank!

2. The Ministry of Foreign Affairs, which put aside the views of experienced ambassadors and diplomats and turned into a field for showing off Erdoğan’s military power and the decisions of his people.

3. The higher education system that the post of the university president and the membership of their academic staff often fell into the hands of people close to the ruling party. /Uploaded/Image/1402/07/07/1402070716470739328449414.jpg”/>

The US dollar was worth only 2 lira in 2013, but with the beginning of Erdogan’s totalitarian policies and Putting meritocracy aside, the situation worsened year by year and reached 4 liras in 2017. In 2018, Erdoğan changed Turkey’s political and executive system from a parliamentary to a presidential one, and the dollar gradually rose above 5 lira and approached the figure of 7.

Erdoğan, Skan He entrusted the country’s economy to his eldest son-in-law, Brat Albayrak, and he managed to blow away 128 billion dollars of the country’s foreign exchange reserves in a short period of time! Why? Because every day he sent several suitcases of dollars to the market so that cheap dollars could be injected into the market and its rate would remain at the border of 7 liras. At some point, Erdogan realized the bitter reality that the treasury was empty!

The trend of increasing inflation and destruction in the Turkish economy has now increased the dollar from 29 lira and 40 kuroush to 30 lira. has approached But it is supposed to rise above 35 lira in the first half of the year.

Evidences show that political tensions and compliance with wrong and irrational patterns of governance in Turkey, more than economic factors based The nature of the market has affected the lira and turned it into a weak and weak currency against the dollar.

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