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Comment by jeffbee | Hacker News Reader

The Turkish lira has been plunging vs. the US dollar for 14 years straight. It has fallen by 90% in dollar terms. All foreign retailers must be constantly readjusting prices, right?

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Actually, it was fairly stable between 2003-2013. Then the hardcore political stuff began happening, Erdogan won the political fight to become a popular autocrat assuming all power in 2017 by changing the constitution through a referandum then winning the elections - all fairly.

When he got free from any checks and balances he was free to implement his unorthodox ideas on economics. He put his son in law in charge of the economy, things accelerated but he still had some rebels around him and they took the son in law out of the picture, stabilised the economy just before shit hit the fan. Erdogan proceeded getting rid of everyone not supportive of his ideas and that's when stuff actually hit the fan.

BTW, there's uncovered corruption on a scale unheard in history. Seriously, Turks are no longer impressed by sums less than a billion of dollars. A mayor purchasing insurance from his own son for 10 million $ a year is something that will entertain you for a few seconds as an interesting detail, what keeps coming is the mayor spending 1 Billion $ on dinosaur statues.

This is when in my minds eye flashed some sort of trailer for an as-of-yet un-produced Turkish adaption of The Wolf of Wall Street, hilarious hijinks on a never before seen scale centered around Erdogan as the surprisingly likable protagonist.

This is exactly what has happened :). People close to the government made unbelievable profits at the expense of the people. If you're interested look up the story of the evoparated 128 billion USD of the Turkish Central Bank.

Our central bank sold 128 billion USD to friends of the son-in-law of Erdogan at a ridiculously low interest rate last year (1 usd = 6 Lira, now it is 14 Liras) with a confidential protocol. People have noticed it through the balance sheet of the Central Bank. Government officials refused the comment first, then they admitted that 128 billion USD were in fact sold. We still do not know to whom it was sold. This is probably the fraud of the century.

The dinosaur statues made me go wtf as well: https://www.bbc.co.uk/news/blogs-news-from-elsewhere-3253591...

The parent was probably talking about not that single statue, but a whole theme park dedicated to dinosaurs, which costed 750M dollars, and opened only for a few months (1). But a bigger (albeit cheaper) wtf in my opinion is a village entirely made of castle-like houses (2)

(1) https://www.duvarenglish.com/domestic/2020/06/25/ankara-them... (2) https://www.insider.com/turkey-abandoned-disney-castles-vill...

To be fair, the hilarious castle-like houses village is a private investment :)

You're right, I wasn't thinking about public sector only.

This kind of thing is common in China. I'm not sure why this would seem very impressive, it isn't even on nearly on the same scale. It is all money laundering of course (or to say, transforming public money and credit into private money).

I still have a 500,000 TL note from Turkey's hyperinflation days in the early 2000s. Back then it was just about enough to buy a loaf of bread. Looks like those days are coming back.

I have a 100 trillion Zimbabwean dollar note, which apparently would buy 2 eggs at the time of issue. It’s actually increased 10x in value since I bought it on ebay though. :)

Or maybe the US dollar has just deflated 10x in value against the only reliable store of value: used 100 trillion Zimbabwean notes on ebay.

I have a 50 lira bill from 2011 - I think was it about 20 euros at the time? Should have exchanged it sooner.

Just keep it and it will have antique value sooner than you expect.

I think it's a combination of the speed/magnitude this time. The TRY has been plunging for a good amount time now but it has been doing that regularly and with smaller adjustments. Having a 15% single day crash seems to have caught lots of people off-guard.

After a while, prices will just be in USD and the local price depends on the day's USD rate: https://news.ycombinator.com/item?id=29363260

Similar to this, in non-Euro Romania, apartment rent prices are given in Euro...

Yes, but price volatility is what matters.

For the same reason that low positive inflation is good, as long as the volatility around the inflation rate is low (so expected value of price is in tight ranges)

So does that mean it would be profitable to short the lira? Not a forex trader but it's where my mind went.

No. There is very little downside left to profit on at this point. The time to short has already passed, there’s better opportunities out there. Be bullish about something.

Shorting involves finding someone willing to bet the opposite way. If you think a pattern is obvious, other people will too, and that will make options expensive, reducing your gains.

(In general.)

If you can convince someone in Turkey to lend you money at a cheap rate, then you can pay it back later in inflated currency. Of course, banks generally jack up interest rates when inflation gets high, but sometimes they are forced not to (and it is usually the ruling class that is allowed to take advantage of those loans).

In general, you can only make money on these things either via information asymmetry or flat out corruption.

Maybe? If you had bought USD/TRY two years ago you would have doubled your money by now. But the same is true if you had bought shares of Google. Nobody can predict the future.

You could look to short as Turkish ETF ($TUR) in the interim.

Well, I am going to Turkey for couple of months this spring.

They probably just readjust their currency hedges

> They probably just readjust their currency hedges

How would you propose that work? Hedging currency risk against unsold product isn’t a hedge, it’s a directional bet.

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