Expert Online: Turkey is heading towards financial disaster

Expert Online posted an article about indications that the Turkish economy is approaching a disaster.

The article said: The Turkish economy is close to collapse. 

The exchange rate of the national Turkish Lira is recording its lowest levels in history, day after day, without stopping. 

This is not due to an onslaught of speculators, but rather a reflection of the real state of affairs.

The Turkish authorities have not taken any measures to stabilize the exchange rate: they have raised interest rates on the interbank market to 1,000%, implemented interventions, used swaps, etc…

 But all of this is, at best, a short-term result.

The country simply lacks the required amount of hard currency.

Whereas the central bank’s reserves at the beginning of the year were about $ 75 billion, they are now only $ 45 billion. 

As rating agency experts note, almost all of these reserves are commercial bank reserves, and there is nothing left with the central bank as the regulator.

However, truth be told, Turkey has very large gold reserves.

However, the likelihood that the country faces a more severe balance of payments crisis, leading to severe disruptions in economic activity and further deterioration of the situation, is very high.

The country’s credit rating has been at “junk level” for a long time already, and Moody’s downgraded it again last week. 

Now, Turkey is in the group of African countries that are not the most prosperous.

Here, it is also worth noting that low oil prices play a mitigating factor. 

If the price per barrel was, for example, $ 65 or $ 70, instead of 40, the balance of payments deficit would be much larger.

Of course, one cannot help but say that the decisive role in the deterioration of the Turkish economy was the Coronavirus. 

The tourism sector is one of the important sources of foreign exchange earnings, but because of it, the flow of tourists has halved this year.