Turkey’s government is on a quest to secure new foreign exchange inflows from “friendly” countries, among them Saudi Arabia and Qatar, as international observers warn that a fresh currency crisis could be inevitable for the country.
With crucial elections looming in June, such inflows are important to prop up the embattled Turkish lira and avert another whirlwind of price hikes, but how much those efforts could help remains open to question.
A hard currency shortfall is at the core of Turkey’s economic turmoil, and with foreign investors staying away, the government has had to use diplomatic channels to secure billions of dollars in foreign funds to ease the crunch — an effort that is likely to continue until the elections. The funds have been used to funnel hard currency to the market and manage expectations in a bid to control exchange rates, which are crucial for an economy that is heavily reliant on imports, including energy. The lira has lost more than half of its value against the dollar since September 2021, when the central bank embarked on unorthodox rate cuts at the behest of President Recep Tayyip Erdogan.