The Turkish lira has been on the downside in the last 5 years compared to the US dollar as shown in the chart below. The high-speed devaluation of the local currency led to the country dollarization with people and commercial banks (which have 43% in foreign currency and more than half in US dollar) preferring to keep their money in dollar or euro.
President Recep Tayyip Erdogan made a call on Tuesday urging his co-nationals to convert their foreign currency holdings into Turkish Lira according to a Reuters report.
“Leave the dollar and the rest. Let’s turn to our money, the Turkish lira. The Turkish lira doesn’t lose value anymore. Let’s show our patriotism like this,” Erdogan said.
Only in 2019, the Turkish Lira has dropped by 10% amid tensions with the U.S about the Turkish military action in the Kurd territories in northern Syria. President Trump threatened to destroy the Turk economy in a tweet in October this year.
As I have stated strongly before, and just to reiterate, if Turkey does anything that I, in my great and unmatched wisdom, consider to be off limits, I will totally destroy and obliterate the Economy of Turkey (I’ve done before!). They must, with Europe and others, watch over…
— Donald J. Trump (@realDonaldTrump) October 7, 2019
In response, Erdogan also announced that his country will boycott electronic goods from the U.S adding that Turkey should switch instead to Turkey’s economic friends, especially new ones in an attempt to strengthen the Lira.
On the other side seems that bitcoin is quite popular in Turkey. Data from CoinmarketCap shows high trading volume on exchanges that offer BTC/TRY pairs. only in the last 24 hours, $70 million worth of Turkish Lira has been traded for BTC in three exchanges as shown in the screenshot below.
The Turkish lira collapse is mainly attributed to the U.S tensions with the country about the geopolitical situation in the area, but it is also a result of the poor monetary policies by the government. What usually happens in countries with hyperinflation is that people fear to be left with worthless currency in hands so they tend to rely on safer alternatives and bitcoin popularity seems to be growing quickly in Turkey.