While Inflation Jumps Above 36%, Turkish People Seek Shelter in Stablecoin

Turkish Lira continues to lose value and since 2021 has lost more than 44%. Meanwhile, the majority of Turkish investors are reportedly investing funds into stablecoins such as USDT and BUSD.

Inflation has become unstoppable in Turkey which is bringing in a huge economic crunch. An incentive had been approved by the Turkish Government which too had failed to control the inflation. At first, the incentive did only a small to the deteriorating situation. However, as of now, the inflation level has gone past 36% approximately.

The only time Turkey saw this huge inflation rate was some 20 years ago and Turkish people had also forgotten it as well. Now they have been reminded once again how inflation causes an economy to deteriorate. Turkish investors have realized that it is time to think out of the box and seek shelter in alternative investments, instead of traditional investments.

In 2021 alone, the Turkish Lira’s value decreased by 44% i.e. nearing almost half of the actual price against USD. Even the country’s President had never seen such inflation in his regime until now. In an effort to mitigate the consequences, the Turkish Government has introduced a scheme called “lira time deposits”. In this scheme, investors have been facilitated in converting their gold reserves into the scheme’s deposits. However, the investors are not convinced, and instead, their attention is drawn towards stablecoins.

Cryptocurrencies’ payments are completely banned in Turkey. However, investment can be made in them. But for the past many months, crypto investment hasn’t also been very promising. As compared to cryptocurrencies, however, stablecoin is not banned in Turkey. As a matter of fact, stablecoin gains were double the gains of cryptocurrencies in 2021. On the other hand, Turkish investors are still continuing their investments in Bitcoin which are not in the knowledge of the Turkish Government.

Meanwhile as compared to traditional investments, Turkish investments are these days more interested in stablecoins. Their most preferred stablecoin is Tether (USDT) which in the past has surged by 29.42% against the Turkish Lira.

Similarly, Binance’s BUSD is the second most preferred stablecoin amongst Turkish investors after USDT. The trade for BUSD with TRY has also surged by more than 7% recently.

The problem is with the Turkish Lira whose value is declining since the year 2021 had started. The investors argue that the situation will not be stabilized for a further few years. Until then they are within their right to seek shelter in alternative investment vehicles. The slump became obvious when the Turkish Central Bank’s Governor was forcefully removed by the Turkish President. The Governor had to lay his arms against the President and had to resign even before the expiry of his term. The removal became the country’s worst nightmare as the new Governor hasn’t been able to bring any stability within.