The Turkish Lira plunged by 60% against the US Dollar at one point, with plans to increase the minimum wage by 50% next year and promote the legalization of cryptocurrency.

The Turkish lira has plummeted by nearly 50% against the US dollar since November, but after a series of measures implemented by the country's president, the exchange rate has surged by 70% from its low point. He also mentioned in a recent meeting that a cryptocurrency regulation bill is ready, with reports suggesting plans to establish an official cryptocurrency trading system.

Turkish Lira Plummets

The Turkish economy is in serious trouble, with data showing that the country's inflation rate has risen from 14.9% in January to the current 21.3%. The Lira to USD exchange rate has also dropped from 0.13 to a historic low of 0.054 on 12/20, a decrease of 59.1%.

President Takes Action

In recent days, the LIRA/USD exchange rate has risen again to 0.092, up by 67.83%. Turkish President Recep Tayyip Erdogan has implemented a series of measures, including:

• Continuing low-interest rate policies
• Bank deposit insurance guarantees
• Raising the minimum wage by 50% to 4,250 Lira (275 USD) per month

Typically, in the face of rising prices, central banks tend to raise interest rates. However, Erdogan firmly believes that high-interest rates are the root of all evil and the driver of high inflation. He has led the central bank to cut interest rates several times, aiming to create high economic growth in a low-interest environment, believing that this will stimulate the economy, create job opportunities, and attract investments to the country.

Erdogan's unconventional low-interest rate policy has faced criticism, but on 12/20, after a cabinet meeting, he announced measures to protect people's deposits from exchange rate fluctuations. If the Lira depreciates more than the central bank's promised one-week repo rate, the central bank will pay the exchange rate difference to depositors.

As a result, the LIRA/USD exchange rate has rebounded by over 60% from its historic low. However, many scholars believe that the low-interest policy is reckless, and even the use of USD reserves cannot prevent the currency from falling in the long term. Although the exchange rate has shown some recovery, the Lira has still depreciated significantly by 31.35% this year.

Cryptocurrency Legislation

Despite facing a catastrophic currency crisis, Erdogan has found time to address the less mainstream issue of cryptocurrency. According to reports from foreign media here, he announced in a meeting that a cryptocurrency bill has been drafted and submitted to parliament. Sources claim the government is working on establishing a cryptocurrency trading system around the central bank to eliminate trading risks.

This may be due to the collapse of Turkish cryptocurrency exchanges Thodex and Vebitcoin in April this year. At that time, the Central Bank of Turkey (CBRT) banned cryptocurrency payments citing significant risks, but now they are considering legalization.

The specific details of the bill have not been disclosed, but Erdogan stated that measures have been taken regarding cryptocurrency issues and the bill has been promptly submitted to parliament.