Topic: Turkey lira was close to devaluation now russian currency (Read 261 times)

Remember that graph about the USD losing  97% of its purchasing power in a century?
Here is the Turkish lira in half that:


One year later how does it look?


Erdoganomics!

The Turkish Lira has been losing purchasing value at an alarming rate. I feel sorry for the people, it’s sad state of affairs. Mismanagement of funds & fiscal policies by those in charge has ruined lives. My advice would he for the people to put their wages into USDT or Bitcoin as soon as they get paid. Any money that isn’t needed for bills or living expenses send straight to USDT or Bitcoin.

Due to the ongoing Russian aggression against Ukraine, on June 12, the United States announced that it was updating the sanctions list against Russia. This time, about 300 companies and individuals were subject to restrictions. These include the Moscow Exchange, as well as its group members, the National Clearing Center (NCC) and the National Settlement Depository (NSD). In response, the Russian platform announced that it was suspending trading in dollars and euros, as well as instruments with settlements in these currencies.

In fact, the Moscow Exchange and its member companies were cut off from the international dollar system and blocked the work of chains in which at least one US resident was present. The official exchange rates of the dollar and euro to the ruble are now set on the basis of bank reporting data - interbank transactions on the over-the-counter market will be taken into account as of 15:30 on weekdays. Now the main trading of dollars and euros will be carried out on the over-the-counter market, and on the stock exchange the Chinese yuan will finally become the main foreign trading currency.
We'll see what happens to the ruble in the end. However, it is certain that this will not benefit him. Slowly and surely the Russian ruble is becoming more and more wooden.

https://24tv.ua/economy/ru/mosbirzha-ne-torguet-dollarami-protiv-rossii-vveli-nosovye-sankcii-upadet-li-kurs-rublja-jekonomika_n2575046

Op suggest a very peculiar interpretation of events in all of these cases. Turkey has been struggling with devaluation of their fiat currency for years, although it has truly skyrocketed in 2022. A very high rate of inflation is bad for the country because it normally means the prices rise up too much, the salaries and other payments can't catch up, people are getting poorer. It's also unhelpful for popularity of a politician. DW article on Turkish inflation doesn't even mention the military, not does Euronews. In the meantime, the way op wrote about it being done intentionally to spend money on the military and actually being stronger while appearing weaker makes it sound as if it's an actual fact, not a mere assumption.
Even if it's related to military spending, one could easily argue it the other way around: Turkey might be overspending on the military, which has a negative impact on the economy (although in case of Turkey I'm not convinced in that). As for Russia, it managed to stabilize their fiat last year, following the invasion and sanctions, but there's only so much a country can do while facing heavy restrictions and vastly overspending on an imperialist war, so trying to portray Russian inflation as intentional is bizarre.

OP is right with devaluations Russia and Turkey do but its not related to military at all. Its mistake. Turkey's devaluations are mainly to turn itself into export market. (when national currency is not worth anything people produce more than what they are able to spend). Turkey was wasting so much money for imports so people are now less wealthy and they import far less. Exports are getting better. Russia doesn't even import a lot I think as they are isolated economy a bit now. But they are trying to cut cost of war machine.

There is an international monetary policies which regulate all the countries in the world. And one of the policies is that no country should print more than the percentage and if the country does that then they have against the international monetary policy therefore, they would be sanction. Since they can't print enough to complete their budget,. They have to borrow from International Monetary Fund (IMF) and World Bank, now for these international Monetary Institutions to help the country in need of money out, they would be conditioned to devalue the national currency and make the international currency (dollar) strong.

And in most time they use the stock exchange to weaken national currency. And this issue is not only in Turkey but other countries as well. And the only solution for this devaluation of currency is bitcoin. Bitcoin is an international digital currency so if the country adopt bitcoin, then there will be hope of 90 to 95% strength in the national currency since bitcoin will be use for international transactions.

The rising of dollar other countries' currencies is also making America an economic power in the world.

At the end of the day, a weak currency remains to be weak and it's creating a domino effect to the entirety of that country just like Turkey.

I think OP is explaining on the side on why it's beneficial for a country that has a weak currency and being devalued when they've got foreign currency reserves that are currently strong like USD.

Other than that, the impact isn't really good at all when the currency is weak. That results in more expensive goods especially if most of their needs are imported.

It's not just a matter of "appear weak if you are strong"; it's also about the art of the sale. There is undoubtedly more going on than just a basic devaluation ruse; Turkey played its cards, and perhaps Russia is doing the same

I mean, I made Bitcoin wonderful, so I obviously enjoy the idea of wielding power for one's advantage! But let's be honest: hardly every decline in the value of a currency indicates the presence of an elaborate military plan. It is not that easy in the world. However, your assertion on Poland, Turkey, and Russia's funding of their militaries does make a tiny bit of logic. But the next time, don't just spout forth antiquated theories and hope to prevail. If you look farther and think more broadly, you might be able to grasp how the world actually functions

From what I have seen, devaluing the national currency may work in the short term, but not in the long term. Inflation may eventually catch up, and it will erase whatever benefits the exporters are getting. This situation works for Russia, who are indulged in active warfare. They need a devaluing Ruble to survive. But no such case exists for Turkey. They don't need to devalue their currency as of now. Because of stupid policies undertaken by Recep Tayyip Erdoğan, the Turkish Lira has lost almost 80% of it's value in the last 5 years. This wipes out savings of hardworking people.

Thanks for the compliments and I appreciate your thoughtful insights. Indeed, the effects of currency devaluation can vary depending on the specific economic context and the country's overall strategy. As you suggested diversification of economy is certainly crucial step for achieving long term economic stability. Therefore, it is important to carefully evaluate the short term gains over long term potential consequences when considering currency devaluation as a tool for economic growth.

You have spoken very well, and I can say that you spoke out of experience or as a result of extensive research and Reading. Devaluation of currency can only give benefits in the short-term, but on the long run there is very much disadvantage which is higher than the advantage. So it is not encouraging to devalue any countries currency. I will use Nigeria for instance, the country devalued their Naira for more than 30 years and today the value of Naira keep crashing. There is nothing else that can help than to diversify and go to agriculture as Op recommended and other sectors. It is not by devaluing their currency, which will later be attacked by inflation and global recession and make it worthless in the future.

You refer to Sun Tzu, but fail to realize when the situation is actually beyond the control of or indirectly caused by the poor economic actions of the leaders of both countries. They have not skillfully navigated themselves into these positions, where their currency is super weak, but have through sheer incompetence engineered their own downfall. The Turkish Lira imploded because Erdogan tried to interfere with central banking functions and go against all the best advice that was presented, which required a painful but necessary adjustment, because he wanted a win at an upcoming election. Putin failed because he did not understand the huge backlash that came with invading Ukraine and some of the most extreme measures ever enacted against another country to isolate it from the richest trading partners in the world. Both were down to very poor leadership.

That makes no sense whatsoever!
For starters it's the law of supply and demand, when they print fiat nonstop, it dumps in value and in the past couple of years (starting from COVID in 2020) Turkey has been printing a ton of money to keep the economy afloat but at the cost of significantly increasing the inflation and devaluation of Lira. From 1 USD being 5 Lira in 2020 to today's 27 which is a 440% rise (or devaluation of Lira).
This has practically ruined Turkish economy.

Secondly what you explained about intentionally decreasing the exchange rate (like what China does) ONLY makes sense for countries that export and need to stay competitive not for a country like Turkey that heavily depends on imports. In other words when the national currency dumps, it becomes more expensive to import anything.
Specifically Turkish military complex heavily depends on imports whether importing arms like air defense or fighter jets which they buy as a whole, or importing parts to be used in manufacturing arms like in their drone industry. Having a weak fiat makes it extremely hard and super expensive!

Now when you compare that with another Country like Russia you are forgetting that Russia doesn't rely on imports as much as Turkey does specially in arms, parts and most importantly energy.
Even the currency devaluation is not even close to being the same 440% compared to 50% (dollar rise against Lira and Ruble).

It is the most powerful military in "Europe" but it is at best a mediocre military globally considering how Turkey has only lost any battle they entered over the past couple of decades and are still stuck in Syria and Iraq being bombed into oblivion by militia

The problems of the Russian economy are based on their moral and psychiatric problems of its government, but that is not the topic of this forum, so let's talk about the real state of the economy.
The problem is that the Russian ruble on the world market is NOTHING. An empty place. You can't buy anything for it, it's not profitable to hold it. It is a toxic asset.

Rupiahs and Yuan, Russia cannot convert into something important - stable currencies like the US dollar, or buy critical goods for the economy. Russia's "friends" India and China are now literally "financially screwing" Russia ! India has banned and blocked the ability to convert Rupiahs into dollars. And also imposed strong restrictions on the sale of Rupees to Russia. Russia can't buy anything but primitive goods from India with the Rupees it can manage (and there are also frozen Rupees). China has done the same.

To understand the magnitude of the problem: "Russian oil producers, who have ramped up shipments to India by 11 times, are facing an inability to get a return for the crude they have sold. According to Reuters, about $39 billion is hanging in Indian banks, at the current exchange rate it is 3.6 trillion rubles, which is the annual budget of the entire program to support the Russian economy.".
This fact you can easily check

On August 14, the Russian ruble fell to 16-month lows: on the Moscow Exchange, the dollar crossed the mark of 101 rubles, and the euro exceeded 111 rubles. The Board of Directors of the Bank of Russia met for an emergency meeting, where it decided to raise the key rate from August 15, 2023 from 8.5% to 12% per annum. The rate increase was unscheduled, since the next meeting, which was supposed to consider monetary policy, was supposed to take place only on September 15th.

The main reason for the weakening of the ruble is the consequences of a large-scale war that Russia unleashed against Ukraine, and, accordingly, the effect of foreign sanctions that were introduced by Western countries, primarily the United States and Europe.

The fall of the ruble was affected by the blocking of a significant part of the gold and foreign exchange reserves of Russia by the deputy borders of the Russian Federation, the disconnection of state and individual private banks from SWIFT, as well as the voluntary refusal of foreign counterparty banks to continue relations with Russian banks. The inflow of foreign currency into Russia has significantly decreased and this has violated the stability of the ruble.

Therefore, the fall of the ruble, which is already one of the three worst world currencies, is natural and there is no manifestation of its strength and foresight of the Russian leadership. Everything is just the opposite.

Source:
https://focus.ua/economics/586148-rubl-ishchet-dno-kak-i-pochemu-stremitelno-padaet-kurs-rossiyskoy-valyuty

I believe that fundamentals of Russian economy appear robust when we look at them in the context of its substantial oil and gas reserves. This positions Russia as one of the major exporters of energy to Europe and many Asian countries including China and India, and those are significant world economies. However, unlike US Dollar, the Russian currency Ruble is not much used as payment method for global trade. This limited global utilization of the Ruble could contribute to the lower exchange rate of on the global market.

Does Russian currency devaluing actually mean much?

At a guess it'd probably make people want to spend less if those value reductions impact the cost of services there.

If Russian currency isn't being used much in the external market, maybe that's why. If yuan and rupees are the main currencies for buying oil, Russia could be holding those currencies instead or exchanging them for cash equivelants.

A lot of devaluations in war are a result of other things such as currency counterfeiting and talent fleeing abroad to a safer country.

Currency devaluation and low interest rates can provide short-term advantages that will allow these countries to invest in their military. However, it's important to recognize the potential trade-offs. While such tactics might bolster short-term power, they can also lead to inflation and economic instability. Each country's situation is unique, influenced by factors like their economic health, geopolitical goals, and international relationships.

It is true that Central Bank's decision of devaluating currency and lowering interest rates can provide short term economic advantages, such as boost in exports, making domestic products competitive in international markets and freezing up funds for military's activities and geopolitical power. Its important to note that economic and geopolitical dynamics are complex and multi faceted, and currency devaluation can also lead to inflation and economic instability. I firmly believe that currency devaluation could enhance exports for short term, but right path to achieve long term prosperity lies in increasing Agricultural and Industrial production.

but there is a huge difference between the countries. Poland spends on army to deter Russia from an attack, so their military power is growing, and Russia is arming itself in panic before the collapse of the front in Ukraine. Poland accumulates military power and Russia burns it through a senseless war.
Poland has a healthy economy and Russia is burdened with huge sanctions, so it has to give huge discounts to smugglers and sanctions evaders. i have heard that the raw materials that russia sells to china do it at a 40% discount.
and china take advantage of the discount and fill warehouses to the top. As soon as the economy slows down, Russia will be in big trouble. Poland can cut back on spending at any time, russia can't.

The currency devaluation trick is : tzun zu "appear weak If you are strong " art of war
Turkey been keeping rates low in order to invest in military and now turkey is one of most powerful country in Europe.
Everybody was talking about turkey when lira was falling... But nobody did not pay attention to the fact that If country lowering the currency they might be up for something.
Now russia currency aswell falling for the same reason wich is keeping rates low and currency value low so this way they can finance war and military.

If we look at 3 countries Poland, Turkey , Russia their monetary policy show's clearly they use lower rates to finance their military.
Now all the world talking about weak russian currency but nobody don't pay attention If country currency is that much low then this country might be very dangerous for other countries.  
The lower rates can give huge financial power.