Turkey’s Currency, 2

 
 
 

Vocabulary

blame	appeal	aluminum
public	pillow	exchange (2)
policy	response	domestic (2)
rate	tumble	to no avail
tariff	exposure	accelerate
crux	wage (2)	central bank
repeat	back (3)	Black Friday
steel	spiral (2)	expectation
critic	maintain	interest rate
climb	borrower	independence
zone	express	according to
debt	concern	announce
loan	default	eurozone
afford	inflation	major (2)
woe	hold (2)	monetary

 
 
 
 
 

Video: Turkey’s Currency

 

Transcript

 
 
 
The Turkish economy is spiraling.

And Turkish president Erdogan is blaming other countries. He speaks of an economic war against Turkey.

So he’s appealing to the public for help.

Recep Tayyip Erdogan, Turkish President: “If there is anyone who has dollars, euros or gold under their pillows, they should go exchange it for liras at our banks.

This is a national, domestic battle.

This will be my people’s response to those who have waged an economic war against us.”

This is the second time in recent weeks that the Turkish president has called on his people to buy the lira, to stop its tumble . . .

But to no avail: Turkey’s lira has hit its lowest level against the dollar since 2001. It has been falling this year — on Friday it fell another twelve percent (12%) to a rate of over six to the dollar.

A tweet by US President Trump announcing higher tariffs on Turkish steel and aluminum accelerated the lira’s fall.

But for the market, the crux of the economic woes lie with the Turkish Central Bank’s monetary policy. It has repeatedly backed market expectations and maintained low interest rates.

As a result, economists have questioned the bank’s independence. Critics believe president Erdogan might have a hold on his country’s monetary policy, something that is worrying the Eurozone Central Bank.

The ECB has expressed concern about some leading European banks’ exposure to Turkish debt, according to the Financial Times. Some banks could lose money if Turkish borrowers default on loans.

Inflation is also a major problem for Turks. They are finding it harder to afford basic goods, now that prices have climbed nearly sixty percent (60%), much faster than wages.

The Tenth of August might go in the history books as “Black Friday” for the Turkish economy.

 

 

Questions

1. Turkish president Recep Tayyip Erdogan says that the current economic crisis was caused by his predecessor. True or false? Give an example.

2. “If there is anyone who has dollars, euros or gold under their pillows, they should go exchange it for liras at our banks.” Does he encourage people to save money and not to buy on credit? Why did he tell people to do this

3. Has this strategy worked? What is happening to the Turkish lira?

4. Turkey’s Central Bank can influence the currency and economy. Is this right or wrong? What should it do, according to economists?

5. Should the Central Bank be completely independent? Is it independent?

6. Turkey’s financial woes are confined to Turkey. Is this correct or incorrect?

7. Are ordinary Turkish citizens directly affected by the situation? Is it for better or worse?

 

A. Why is there (hyper)inflation in Turkey?

B. Does your country experience monetary inflation, deflation, fluctuations or stability?

C. What causes inflation?

D. Is inflation good, bad, both or neither for ordinary people, businesses and the government?

E. What will happen in the future?

F. What is the cure or solution to inflation?