Answer by George Gritsis

There’s no reason to believe in a TL collapse. However the near future looks fraught with danger.

Recent USD to TL history and predictions (friedberger-burgfest.de)

The Turkish Lira’s relative value to foreign hard currencies is influenced by several factors:

a) Real Inflation levels and their corollaries, interest rates.

As long as the former are higher than the latter, the TL will remain unattractive to international investors and savers within Turkey, leading to a currency value erosion. One of the problems is assessing real inflation figures as it appears that the government may have been doctoring statistics. Similarly, the TCB has followed wildly unrealistic interest rates policies in the past, and there are serious doubts about the institution’s independence.

Any discrepancies between advertised inflation figures and real ones, imply that growth forecasts need to be adjusted for the latter.

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