Turkey’s residents resort to cryptocurrency as Turkish lira free falls

U.S. sanctions have pushed yet another country to switch to using cryptocurrency – Turkey. The recent trade tariffs announced by the U.S. government on Turkey have left citizens with no choice but to start buying Bitcoins, and dump the Turkish currency Lira.

But why are citizens dumping the Turkish fiat? The ongoing tensions between Turkey and U.S. have led to the lira spiralling to record lows in the last few days.

On Friday, U.S. President Donald Trump announced that his government was doubling tariffs on Turkey’s steel and aluminium exports to the U.S. He added that his government’s relations with Turkey had soured.

I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!

— Donald J. Trump (@realDonaldTrump) August 10, 2018

According a New York Times report, the latest tariffs would severely hit Turkish steel exports to the U.S., which accounts for 13 percent of Turkey’s total steel exports.

However, according to a Reuter report, Turkey’s President Tayyip Erdogan denied that the country was in a currency crisis, and that the plummeting lira had nothing to do with Turkey’s economic fundamentals.

The report added that the Turkish lira had declined around 40 percent this year alone.

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The contention between the two countries have to do with their differing interests in Syria and the arrest of evangelical pastor Andrew Brunson – who was arrested during a crackdown which followed a failed coup almost two years ago.

The mounting tensions between the two countries have left the Turkish population with no choice but to resort to safer havens such as the U.S. dollar, Japanese yen and Bitcoin.

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As of 1741 GMT, Bitcoin [BTC] had climbed 2.8 percent higher against the Turkish lira, with one BTC valued at around 40,138 lira.

According to a CoinDesk report, trading volumes on Friday at Turkish crypto exchanges Paribu, BtcTurk and Koinim had more than doubled over the last 24 hours.

Trading volumes have since mellowed down with BtcTurk currently having volumes of close to $6 million while Paribu saw volumes of nearly $3.2 million.

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Other nations resort to cryptocurrency to fight U.S. sanctions

Iran, which is currently battling harsh U.S. economic sanctions, has been working on creating its own cryptocurrency. The Iranian government had said in April that it was working on an experimental local digital asset.

Venezuela has already created its very own virtual currency – petro – in a move to counteract U.S. and EU sanctions imposed on the country.

The crypto is backed by oil, gas, gold and diamonds and will be pre-mined, which means that the government would solely produce and control it.

According to an Al Jazeera report, the government has allocated five billion barrels of oil to back its new digital asset.

Image via Shuttestock

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