HomeEconomicTurkish lira drops to a record low as holidaying in Turkey becomes...

Turkish lira drops to a record low as holidaying in Turkey becomes even more attractive.

The Turkish lira has fallen to a record low, and economists predict it will fall further. Residents of the Baltics can take advantage of this – vacations in Turkey will now cost much less, Lithuanian Delfi writes.

If in 2019 you could get 6 Turkish liras for 1 euro, then yesterday you could get 25.89 liras for 1 euro. According to the Lithuanian economist Alexander Izgorodin, the current fall of the lira is due to two circumstances.

“Firstly, Western central banks are raising interest rates, so they are pulling some capital out of emerging markets. This has a great impact on exchange rates,” Izgorodin said.

“The Turkish lira is no exception; its fall is because a very large amount of capital has flowed from emerging markets to the US market due to rising interest rates and government bond yields. This will continue shortly, as the US government recently approved raising the debt ceiling, which means that the country will aggressively issue new bonds, and capital will continue to flow into the US market,” Izgorodin explained.

Another reason is the recently re-elected Turkish President Recep Tayyip Erdogan. “The lira began to fall in the election year, as there was a lot of uncertainty about the winner in the first round. But now the lira is falling because Erdogan has won. His victory means he will once again pursue unconventional monetary policy, which stipulates that Turkey’s central bank cannot raise key interest rates. Erdogan will also interfere a lot in the work of the Central Bank,” Izgorodin said.

The Lithuanian economist believes that the lira will continue to fall, and soon 1 euro will cost around 30 lira. “This is very good for the people of the Baltic States. The depreciation of the lira means that holidays in Turkey are getting cheaper and cheaper, the prices of hotels, local goods, and services will become cheaper, and we will be able to buy more,” he said, adding that it will be most profitable to pay for goods in lira when shopping.

As of the morning of June 27, 2023, one Turkish lira is equal to 0.035 euros.

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