In Turkey, inflation reached 68.5% in March, a sharp increase that propelled Bitcoin to unprecedented levels against the Turkish lira. Recent data from the Turkish Statistics Institute highlights an increase in monthly inflation of 3.16%.
Turkish citizens turn to digital currencies amid high inflation rate
Key sectors such as education, telecommunications and hospitality led to rising inflation, with monthly increases of 13%, 5.6% and 3.9% in each. The education and hospitality sectors experienced the highest annual inflation rate, recording 104% and 95% respectively.
As a result, the Turkish Central Bank has aggressively raised interest rates, now to 50%, to combat inflation, which remains above the single-digit target.
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In addition, the significant adjustment to the minimum wage that occurred at the start of 2024 exacerbated inflationary pressures. This policy led to a doubling of the minimum wage compared to the previous year, which gave rise to a complex economic scenario.
Despite the slight easing seen in March, experts such as Nicholas Farr of Capital Economics emphasize that tight monetary and fiscal policies are necessary to achieve stability. And he said mouse:
“The latest inflation figures do little to change our view that further monetary tightening is necessary and that more concerted efforts are also needed to tighten fiscal policy.”
The value of the Turkish lira has depreciated by around 40% against the dollar over the past year. Which highlights the weakness of the currency. Conversely, Bitcoin experienced a significant increase in Turkey, where it reached its maximum values since June 2023.
Cryptocurrency regulations in Türkiye are about to expire
An opinion poll found that 58% of Turkish investors They view cryptocurrencies as a long-term wealth creation tool. In addition, 37% of them see it as a hedge against the depreciation of the local currency.
While Bitcoin is at the forefront, Ethereum and stablecoins are also attracting great interest among Turkish investors. This shift to digital currencies is partly due to the decline in the value of the lira against the US dollar, which has prompted many people to resort to digital currencies.
The Turkish government is responding to the trend toward digital currencies with regulatory measures. Finance Minister Mehmet Simsek has indicated that comprehensive regulation of digital currencies is close to being completed.
Read more: Why has the Securities Commission used litigation to regulate digital currencies?
These regulations will subject cryptocurrency exchanges to strict oversight similar to that of traditional financial institutions. The Capital Markets Board (CMB) of Turkey will enforce these regulations, ensuring operational, regulatory and financial compliance as well as a robust IT infrastructure.
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