Turks keep holding on to dollars as mistrust in Erdogan lingers
Ankara’s currency-defense scheme has stopped the lira’s nosedive for now, but there is no tangible sign that a return to the lira has begun to reverse the alarming dollarization in the country.
The jury is still out on Ankara’s scheme to encourage a return to the Turkish lira as hard-currency depositors are sticking to their assets despite a state-backed market intervention that rallied the lira last week.
The scheme, meant to reverse an alarming dollarization trend, was announced by President Recep Tayyip Erdogan on Dec. 20, shortly after the lira tumbled past 18 versus the greenback. It was an all-time low, to which the embattled currency sank from the region of 11 vs. the dollar in just a month amid growing apprehension over Erdogan’s push for interest rate cuts despite soaring inflation. Officials may claim that the scheme has sparked a return to the lira, but financial data indicate the opposite.
