The lira has lost more than 20 percent of its value against the USD and the euro since 1 January, 2018. And the free fall of the currency continues. Meanwhile, consumers feel the effect of the currency decline since prices for imported goods haven risen sharply. In contrast, air freight still shows no signs of contraction.
Life becomes costlier for Turkish people – rapidly and consecutively with no end in sight. Shown by the double-digit inflation rate that makes domestic products more expensive, lowering the
income of large sections of the population. This is best illustrated with Simits, the popular sesame ring: At the end of last year, a Simit had cost one lira at Istanbul bakeries, now they demand
one and a half lira.
On gasoline, the government has stepped in by subsidizing fuel in an attempt to avoid prices exploding, which could cause social unrest, influencing the outcome of the presidential and parliamentary elections on June 24.
“Freighters are full”
Although the Turkish export industry is benefiting from a weaker lira, making their products cheaper on external markets, an increasing number of companies, which have taken up debts in USD or euros are struggling financially. Once converted into lira, their debts have doubled during the last two years, and interest rates are becoming costlier. Simultaneously, a fast-growing number of larger industrial companies can no longer pay back their loans based on euros or USD but are forced to restructure their debts.
Surprisingly, this has had no effect on cargo imports up to now. “Our freighters are full, enjoying a high load factor despite some dark clouds gathering on the economic horizon,” confirms MNG chief Ali Sedat Oezkazanc to CargoForwarder Global.
“Conspiracy of foreign powers,” Erdogan
According to Mr Erdogan's government the decline of the lira is not caused by economic reasons. Instead, Ankara speaks of a “conspiracy of foreign powers” to fuel anxiety in an attempt to create a climate of fear among Turks. He claims that this is a perfidious plan to negatively influence the upcoming national elections aimed at driving him and his AKP partisans out of power. "If some believe they can change the outcome of these elections by playing with dollars and euros and creating conditions that harm the people and the people's purses, they are mistaken," state news agency Anadolu, quoting government spokesman Bekir Bozdag.
Addressing the broad public, Erdogan called on Turkish citizens to stick to the Lira. “Do not exchange our local currency for foreign currency," he urged.