19 November this year marks the 19th anniversary of the beginning of the Justice and Development Party’s (AKP’s) rule in Turkey, the longest period of uninterrupted administration by a single party since the first multi-party elections in 1946.
19 November also marks the lowest value of the Turkish Lira against reserve currencies like the US Dollar and the Euro, following a one percentage point cut in the one-week repo rate by Turkey’s central bank on Thursday. The cut has resulted in TL losing over 4% of its value in a single day.
Unlike the historical 27% fall in the value of the Turkish currency against the US dollar on 22 February 2001, which triggered an unprecedented economic crisis and led to the emergence of the AKP as the new dominant political power in Turkey, the recent TL depreciation neither comes as a shock, nor will be triggering a crisis since there is already one, and the depreciation has been going on gradually over a long period of time.
On the day the first AKP cabinet was formed with Abdullah Gül serving as the prime minister, one US dollar was worth 1.59 TL, while on the same day 19 years later, it was worth 10.95, around noon local time. The over 10-fold appreciation in the value of the US dollar against the TL isn’t distributed evenly over time, and actually serves as an indicator for the performance of the one-man-rule system, introduced after the elections in 2018.
On 16 April 2017, a referendum took place in Turkey, presenting constitutional changes to the popular vote in order to abolish the office of the Prime Minister and replace the existing parliamentary system of government with an executive presidency and a presidential system. The results clearly showed that the people were dramatically divided in almost equal halves over such a transition: 51.4% voted in favour while 48.6% voted against.
On 2 January 2017, as the issue of transition to a new government system was debated, one US dollar was worth 3.62 TL, which meant that it had appreciated 127% in the course of 14 years. The appreciation of the US dollar against the TL in the following five years, however, has been 202%.
The day the new government system came into effect on 25 June 2018, one US dollar was worth 4.60 TL. This means that US dollar has appreciated 138% against the TL during the one-man-rule system in the course of just three years and five months: the TL has lost more than half its value against the former.
It must be noted that a new currency, the New Turkish Lira or YTL, was introduced on 1 January 2005 in Turkey with a redenomination by the removal of six zeros from the Turkish Lira, meaning that one US Dollar is now actually worth 10,960,000 TL.
