Question

how was the turkish currency economy before financial crisis for the Turkish Currency and Debt Crisis 2018 happened

Answer 1

Answer:

Generally, if we look Turkey upon the cities its magnificent, everyone can misapprehend that, they are very developed. It can be easily compare with the developed countries, European American etc. However, the main setback for them was all the infrastructure, investments were invited from outside which have to re-pay back. With only $85 billion reserve gross foreign currency it’s bound to happen.

Prior to this crisis Turkish Lira was very good as borrowing rising, exchanges rate increased. For example: In 2005: 1.344, 2010: 1.503, 2015: 2.720, 2017: 3.648 and 2018:7.019 respectively.

During 2005-2010 Turkey borrowed so much of money from outsiders private banks, ultimately have to borrow, during those periods it was easier because they have funds in reserved and the exchanges rate also not much different . As interest increases the exchanges rate also increased. Now the reserved they have needs to be almost 5-6 times since the exchange rate has increased.

Earlier all the investors are attracted to Lira because it’s one of the most influential in trade, due to financial crisis other countries are also impacted, this is why it’s one of the most talk economy in the current economy.

Below are the main factors affecting the current financial crisis:

1. Currency down
2. High inflation, rising borrowing costs
3. Intervene in central bank which should be independent
4. Correspondingly raise loan Defaults