We know that the economic situation isn't good in the world because of this pandemic (COVID-19) including Turkey. So recently Turkey has taken some steps for its economy. 1st step: currency swaps with other countries amid this pandemic. After then some increased in the value of lira from the dollar. 2nd step: reinforcing its economy (Implementing long- and short-term economic stimulus based on Turkish lira with low-cost financing programs).
Dear Md Tarequl Islam,
in my opinion the economic situation in Turkey in not very positive. There are short term and long term factors influencing on the exchange rate of Turkish lira. Among the most important risks might be enumerated: the political tensions and in general negative politican influence on economic situation, the way of financing the economy with portfolio investments instead of FDI, and the current account deficit. The current situation can be described as the third generation of currency crises (the same which occurred in South East Asia in 1997), however the main causes are different. In Asian Tigers they were mainly microeconomic and external, whereas in Turkey they are macroeconomic and external. The best way forward is to implement structural reforms in the economy and a long period of strong work (leading to reduction of the current account deficit in the country). It is an important question if the current authorities are motivated for such long term and difficult reforms. If they are not ready for self-sacrifice and hard work leading to reforms, the economic situation will worsen and the currency crisis may become more severe. The next two or three years should provide answer about the direction of the future of Turkish economy. I cross my fingers for good economic choices and wise decisions.
you cant solve your political tensions with something else. Turkey needs to work more on political issues.
While Turkey will be able to temporarily stabilize the value of its currency by interventions of its central bank, in the long term it will succumb to the pressures of the market. Due to many reasons, especially political factors, foreign direct investment has decreased dramatically over the years and even though the interest rates have been raised considerably in Turkey, this will only accelerate the vicious cycle of economic downturn in Turkey.
Underlying fundamentals not in favor of quick fixes. Inflation and high interest rates will not help. Monetary policy has limited usefulness in volatile situations like this. Political and health issues will add shocks to the economy.
Since the start of 2018 Turkish Lira has fallen by at least 35% against the US dollar. There have been concerns in the financial markets about the the Turkish economy.
Turkey's lira lost 44% of its value (against the U.S. dolar) in 2021, and has fallen by more than 10% this year.