Despite the sharp fall in the Turkish lira, which fell to 18.5 lira per U.S. dollar on December 20 (for most of 2021 it was in the range of 5-10 lira per dollar), in Turkey there is no visible panic. Moreover, one can rather speak of a rise in patriotism and faith in the future.
On the evening of December 20, after the banks had already closed, Turkish President Recep Tayyip Erdoğan gave a speech in which he announced a new plan to return people’s savings in dollars and euros to the lira. According to the plan, holders of deposits in lira will receive compensation for currency losses. That is, if a person translates, for example, dollar savings into lira and puts them on deposit, then if at the time of deposit withdrawal the dollar rate will be higher than at the time of deposit, the state will compensate the difference. In other words, it’s about providing a guaranteed income in lira on deposits. Immediately after Erdogan’s speech the miracles began. It was delivered at around 9 p.m., when the banks and exchange offices were already closed. In spite of this, there were immediately people who were able to exchange about $1 billion in the night and put the liras they received into deposits.
Be that as it may, the Turkish Lira exchange rate rose by 30% on December 25 and reached 10.92 Lira. Also, after the president’s speech the planned fuel price increase was canceled. This enabled Erdogan to state on December 23 that the economic program had worked, and the government, together with the people, escaped from the political, economic and social trap into which they had tried to drag Turkey. He also assured that there would not be early elections in Turkey, no matter how some might want it, and the elections would take place as planned, in 2023.
Skeptics believe, among other things, that Erdogan’s plan is fraught with unwinding inflation, because if the dollar is still unable to be held, then compensation will have to be paid. True, Turkey has about 500 tons of gold and $100 billion in reserves.