The Turkish lira dipped another 5.6%, hitting record lows against the US dollar on Thursday after the country’s central bank slashed its policy rate in line according to the unorthodox economic scheme created by President Tayyip Erdogan.
The currency hit a low of 15.689 after the bank’s decision, before rebounding somewhat, limiting losses to 15.58 by 14:30 GMT today. Meanwhile, the dollar has more than doubled in value against the Turkish lira during 2021, causing deep concern in Turkey at a time when inflation is rising all over the world.
Now, some Turkish citizens are saying that they are going hungry, only able to afford to have eggs and a few tomatoes at dinner time — and sometimes not even that much food.
Many have criticized Erdogan’s new economic plan, which focuses chiefly on exports and lending:
“The central bank’s tolerance for lira pain certainly appears much higher this go around with Erdogan now more or less fully in charge of rates policy,” said Dennis Shen, a macroeconomist at Scope Ratings.
Turkey’s central bank has sold off dollars four times in the past two weeks, whittling away at the country’s foreign reserves and backing them into a corner.
After the latest cut, market watchers forecast more pain for the lira, which has lost 47% of its value since the start of September alone.
“It is a bold move that will certainly cost Turkey a lot of money, and headache. The kneejerk reaction is a heavy selloff in the lira. I expect the dollar-try to end the year within the 17-19 band,” said Ipek Ozkardeskaya, an analyst at Swissquote Bank.
The lira has lost nearly half its value since September, and economists predict inflation will rise to 30% in 2022 due to import prices.
Bread lines stretch across Istanbul as value of lira plummets
Bread lines spanned blocks in Istanbul, Turkey on Monday due to the country’s struggles with inflation.
Scores of Istanbulites have turned to the city’s subsidized bread program, Istanbul Halk Ekmek (which translates to “Public Bread”), in order to save money and feed themselves.
The Istanbul Halk Ekmek has an 8.8 oz baguette available for 1.25 Turkish liras ($0.09) which is currently half the starting price for bread at local bakeries.
Although the difference may seem negligible, the savings have become crucial for many Istanbulites who have been lining up at the roughly 1,500 bread kiosks throughout the city daily.
71-year-old retiree Niazi Toprak, who was waiting in line for the next batch of bread, told Al Jazeera that “Everything is getting expensive, from your food to your bread, from your shirt down to the socks you wear.”
Toprak is a retired truck driver and produce wholesaler who stopped working five years ago. Toprak has had to move in with his children recently in order to save money:
“My retirement social security only brings in 800 liras ($56) a month, so that’s not enough these days to live alone on,” Toprak said. “We are four people in the house, and our rent is 2,000 liras ($140 a month). Each of us eats at least one loaf a day, so I plan on buying four loaves from here. You need to save every bit of money you can these days.”