FX.co ★ Lira nosedives after Erdogan’s appeal to convert dollars into national currency

A head of an authoritarian country may face a harsh reality when people have to support their leader despite the fact that they do not believe him.

Since the very beginning of his presidential career, Recep Tayyip Erdogan has been proud of the support from those people who vote for him. In every speech to the crowds of state employees, gathered either voluntarily or compulsorily, Erdogan thanks the common people for their loyalty. Although people attend such meetings, they will hardly give their savings to support the national currency. After Recep Erdogan fired the central bank governor, he called on ordinary people to boost the depreciating national currency by converting their dollar savings into lira and investing in gold. The Turkish president said that this strategy would be beneficial for both the government and citizens. However, this appeal to people gave opposite results. Trying to save money, the Turks converted their savings into foreign currencies and precious metals. The overall sum of converted savings reached $15 billion in just three weeks.

According to the data from the Jewelry Exporters' Association of Turkey, people keep $220 billion and almost 5,000 tons of gold, which remains a traditional means of saving money. As a result, a slump in the Turkish lira only accelerated and the price returned to its all-time lows.