Turkish residents are losing faith in their local fiat currency, with confidence in the lira falling 20% this year, as they are dumping lira, converting it to dollars, and buying gold.
It has been reported by Reuters that even with market interventions and reassuring stories about monetary stability coming from the government, the locals’ faith in the lira is on a downward trajectory.
However, inflation is currently at 11.8% and has overtaken the amount of interest offered for savings at banks.
One resident said that he had bought gold as a safe-haven asset by saying:
“I think it is the best investment right now so I converted my dollars to buy gold, I might withdraw my lira and buy gold with it too, but I am scared to go to the bank right now because of coronavirus.”
Likewise, locals expect more panic-selling of the lira if the government cannot boost confidence in the currency, which has dropped by almost 20% in 2020.
With rampant inflation eating away at the Turkish lira, residents are losing confidence in the fiat system https://t.co/xCgdpekJGl — Cointelegraph (@Cointelegraph) August 19, 2020
According to the report, Turkey’s economy depends mostly on imports. The pandemic has worsened inflation and it may also cause a balance of payments crisis, further weakening the currency.
Although fiat currency like lira continued to lose value due to massive inflation, Bitcoin’s market cap has reportedly become greater than Bank of America and the New Zealand dollar.