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Turkey hastily switches to cryptocurrency ...

Turkey hastily switches to cryptocurrency due to lira devaluation
CONTENT

  • Turkish lira falls amid volatile economic and political environment

  • Turkish government wants to speed up regulation of cryptocurrencies

  • The country is the leader in the number of bitcoin hodlers in the Middle East

International consortium of news organizations developing transparency standards.

Turkey is rapidly adopting cryptocurrency as a means of payment. The main reason is galloping inflation. In September this year, inflation reached a record high of 11.75%.

Turkish lira can’t stand the pressure

Turkey hastily switches to cryptocurrency ...

In October this year, the rates of the euro and the dollar against the Turkish lira reached record levels. According to the Central Bank of the Republic of Turkey, the value of the dollar against the lira was 7.97 TLY. The reason for the fall in the value of the currency remains the US sanctions against the regime of Recep Tayyip Erdogan after the acquisition of the Russian S-400 air defense systems.

Since the beginning of the year, the dollar has risen by about 33% against the lira. At the beginning of the year, the dollar / lira exchange rate stood at TRY 5.945. But the currency was already on a long trajectory of weakening due to the country’s stimulating monetary policy, in particular due to the frequent refusal to raise interest rates during a period of rising inflation and a reduction in foreign exchange reserves to maintain the lira..

For comparison, at the beginning of 2018, the value of the dollar was only 3.77 lira. Now analysts predict that figure will reach 8.5.

“The main problem with the lira is the lack of reliable inflation targeting by the central bank, which ultimately devalues ​​the currency. The underlying monetary philosophy remains unorthodox. Free foreign exchange reserves of the Central Bank of Turkey fell to a negative value, and capital outflow continues, ”summed up Tatha Ghoz, analyst at Commerzbank.

The soonest adoption of cryptocurrency as a means of payment may be the salvation of the Turkish economy.

Bitcoin and gold as a lifeline

One of the most logical options for saving funds for the citizens of Turkey themselves may be investments in gold and bitcoin. This is the opinion of international experts. Today, the cost of a gram of gold in Turkey is about 484 TRY. For comparison, the cost of a gram of gold in January 2019 did not exceed 272 TRY.

Trends in gold prices in Turkey

Turkey hastily switches to cryptocurrency ...

Also, Turks are actively investing in bitcoin. Today Turkey is the first country in the number of bitcoin hodlers in the entire Middle East. This is evidenced by the data of the analytical report Chainalysis.

“Turkey is the top-ranked country in our Global Cryptocurrency Adoption Index, ranking 29th overall and accounting for the most total transaction volume in the region,” says a briefing note to the report..

The Chainalysis global cryptocurrency adoption index is ranked 154. In addition to Turkey, countries with a high level of adoption of cryptocurrencies in the Middle East region are Iran (52nd place) and Egypt (64th place).

Earlier, the BeInCrypto portal reported that 20% of the country’s population are bitcoin holders, and about 2.5 million are actively engaged in trading. At the same time, the government of the Republic of Turkey is positively disposed towards the development of the crypto industry in the country. For example, earlier Turkish leader Recep Tayyip Erdogan said that Turkey is considering the possibility of international settlements in cryptocurrencies, and also plans to issue its own digital money – digital lira..

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