Years of high inflation in Turkey have devalued the currency so much that people are now turning to buying gold or dollars. The Turkish currency, the lira, is set to become defunct. In this situation, people are now buying and selling dollars and gold in a dark alley inside the grand market of Istanbul, the main city of Turkey.
According to CNN, the inflation rate in Turkey is now skyrocketing. Turkey’s inflation rate rose to 67 percent in February, according to figures from the country’s central bank. The discrepancy between official statistics and reality is so great that many people think that inflation in Turkey has reached 100 percent. Türkiye once cut policy interest rates amid inflation but has raised them over the past year. A year ago, the interest rate was 8.5 percent, which went up to 45 percent last January.
Despite this rise in interest rates, the value of savers’ money is falling. To sustain savings in this reality, Turkish people are now running to gold shops in Istanbul’s grand market. Grand market gold trader Omar Tojduman told CNN. People are coming to the market with whatever they can to buy gold. Some may be bringing suitcases full of cash, and some are bringing what they can in their pockets.
Omar Tojduman also said that once upon a time, people used to buy houses and land. Now interest rates are so high that people are either keeping money in banks or buying gold. Many are investing in the stock market. As a result, Turkey’s stock market has increased the most after Japan’s stock market this year.
The streets of Istanbul are now filled with foreign exchange booths and gold sellers. Their existence can be seen in almost every block at some point. Those who have dollars in their hands now can now pay. Many currency exchangers in Istanbul are now buying dollars at a higher rate than the official rate. The demand is so high that it is not hurting them, because there is no problem with selling at a higher price than that.
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Ahmet Basaran Kole, owner of a currency exchange, told CNN that people only buy the lira when they don’t. He explained the matter in this way: ‘When people have to buy in lira, they are buying lira. But people are mainly buying dollars for investment and savings.
It depends on whether people have savings or not. CNN asked Melek Alkes, a preschool teacher in the Asian part of Istanbul, what currency he saves in. Hearing the question, he burst into laughter. She said, ‘I can’t keep anything; I have no savings.’ His salary has increased slightly in the past year, but that is nowhere near the rate of inflation. To cope with this situation, he has become dependent on credit cards. Now he has to find another job to meet the expenses.
Melek Alkes currently spends his earnings on interest on credit cards.He then used that credit card to make the remaining purchases for the month. His sister and mother are now pension-dependent. Now, they are finding it difficult to manage the family.
The same is the case with Erhan Yeigul, an amateur football player in Istanbul. He also works in an office. Even though Asha is fashionable in clothes, she is also struggling to run the family. His family is already in the credit card trap.
Irhan Yeigul said, ‘You can say, I am young, I can work. Yes, I work; I have two jobs, but I still can’t earn a living.” He added, ‘I try to fill the fridge with the money I earn from playing football and buy food and essentials for the children.’
High inflation started in Turkey in 2021. But then the country’s President Recep Tayyip Erdoğan did not raise the policy rate but instead cut it. This worsens the situation. Then, when the situation gets out of control, the country’s central bank starts raising the policy interest rate.
In this situation, economists think that the people of Turkey will have to go through a difficult situation for the next six months. It will take some time for higher interest rates to take effect. After that, the situation will start to be tolerable.
