The Turkish Lira crashed from 8 in September 2021 to 18 TRY per dollar. A dive to 10 made it bounce to 14, and since then it has gradually fallen but has recently become somewhat stable at 18.5.
Inflation also began spiking at the end of last year, but has become somewhat stable-ish since June at around 80%.
Interest rates on the other hand are down and down, from 14% in August to 10.5% with suggestions they’ll end the year in single digits.
Those interest rates were at 19% at the end of last year, with the move to lower them blamed for the crash in TRY and the spike of inflation.
But why did the huge summer cuts not reflect on either? Was it all priced in, including inflation pricing in itself somehow?
Maybe, but things like the central bank balance sheet, the commercial banks balance sheet, and the money supply have stabilized after doubling at the end of last year.
Fiat money is a complex mechanism in a public-private partnership that allows for the privilege of money creation through debt.
Now why exactly did all this money get printed at this scale just when they moved to lower interest rates is not too clear, but whatever it was seems to have cooled even though interest rates keep being lowered.