Turks rushing to cryptocurrencies to fight against inflation
As economists issue warnings that Turkey’s economy may be on the brink of hyperinflation, recent data published by the Wall Street Journal shows Turks pouring their capital into cryptocurrencies such as bitcoin and tether to offset risks.
According to Wall Street Journal, Cryptocurrency trading volumes conducted using the Turkish lira reached an average of $1.8 billion in the last quarter of 2021, a big jump comparing to previous quarters.
Turkey’s official inflation rate stands at 36.1 percent, the highest it has been in decades. However, according to a report published by independent inflation research group ENAG last week, real consumer price inflation could be as high as 82.8 percent for December.
The Istanbul-based group says it uses a very similar basket of goods to measure price increases as the Turkish Statistical Institute (TÜİK), which prepares Turkey’s official inflation data. The accuracy of the institute’s figures has been a point of contention since at least 2018, when a key bureaucrat was linked with worsening inflation data in news reports.
Turkish President Recep Tayyip Erdoğan replaced the head of TÜİK for the fourth time in less than three years in the first quarter of 2021, appointing an academic this time.
The independence of Turkey’s central bank, TÜİK and other top economic organisations has been in question after a series of dismissals, reshuffles and appointments, many of them by presidential decree. Erdoğan replaced 10 of TÜİK’s regional chiefs via a decree in June 2020, prompting his political opponents to raise concerns about the institution’s credibility.
Erdoğan has sacked three central bank governors in just over two years, along with a majority of members of the bank’s rate-setting committee.
The Turkish lira has slumped to successive record lows over the past few months in a repeat of the turmoil in 2018. In December, Turkish Lira dived by as much as 15 percent against the dollar to an all-time low in a single day.
Turkish President Recep Tayyip Erdoğan has been publicly ordering the central bank to cut interest rates costs and Turkey could be heading towards hyperinflation should he refuse to abandon that approach, the Financial Times reported.