Turkish Lira is bleeding compared to USD. Parity was under 5 lira (TL) for $1 until August 1. Since that moment the lira is in a free fall and today markets are having difficulty coping with USD price which is above 6,5TL.
Yesterday Turkish Finance Minister spoke on national TV channels and promised that foreign currencies in the banks would not be exchanged to TL by the government. He also urged large companies not to use this crisis to their advantage, since clearly it would affect any economical agenda government potentially has.
The depressive atmosphere of traditional financial markets keeps drawing more and more investors to cryptocurrencies, in particular, to bitcoin. A common perception of crypto in Turkey was not very positive, however, with recent developments and double-digit inflation figures benefits of crypto are obvious to investors.
Turkish crypto exchanges’ transactions almost doubled recently. According to the data from Google Trends, interest in Bitcoin increased markedly in August, while local exchanges have seen volumes explode by over 150 percent this week alone.
However, something else happened over the weekend. USDT is usually following USD-TL parity since it is anchored to US Dollar. Yesterday this parity had some fluctuations. Turkish Crypto Exchanges saw a lot of USDT purchases by 6,4TL rate, Cointurk reported today. Investors then bought USD with their USDT on Forex, since USDT traded around 7,4TL in that platform, thus benefiting from 15% difference.
A similar thing has happened on BTCTurk. Some investors bought USDT by TL, transferred their funds to BTC and sold for Turkish Lira before fiat markets opened this morning.
It looks like local financial experts this time are in agreement with the government: “Turkish Lira was losing its value, but the changes in the last two weeks are highly unnatural and the result of heavy manipulations”, they say.
WHY IS IT IMPORTANT
1. Current situation in the economy may lead towards a positive view on cryptocurrencies from both the government and public. Turkey might follow the same path as Iran and Venezuela, countries which also suffer from US sanctions, by launching its own coin.
2. It also rules out the possible introduction of a ban on working with crypto assets. Experts note a strong increase in the popularity of bitcoin in Turkey. Local residents are actively using digital money, disillusioned by the government policy and the weakness of Turkish lira. In this situation, digital money allows people to feel more secure, even despite the rate jumps.
3. UBS research shows that Bitcoin market cap is around $112 billion which is very close to the volume of the Turkish economy. If Bitcoin reaches $8,000 value, it could replace the nation’s economy.