First, the net foreign debt of the Turkish government is now close to 45 billion US dollars, while the foreign debt of Turkish companies can be counted as high as 92 billion US dollars, totaling 654.38+03.7 billion US dollars, which is a great increase compared with 654.38+00.8 billion US dollars in the same period last year and has greatly exceeded Turkey's foreign exchange reserves. Theoretically, Turkey is seriously insolvent. Of course, the debt is not paid in one lump sum, and we will not see the Turkish government and company default for the time being. However, insolvency will give investors and the outside world sufficient reasons to bearish on the Turkish lira, which is also the main reason for the pressure on the Turkish lira in recent years.

Second, compared with the previous two years, the prices of commodities such as oil and natural gas have soared this year, and Turkey needs to import a lot of oil and gas and consume a lot of foreign exchange, which is also unfavorable to Turkey. In addition, it's the end of June 5438+065438+ 10 and June 5438+February, and the profits earned by foreign investors who set up companies in Turkey have a great demand for foreign exchange and repatriation to their parent companies. This is also worse for the already stretched Turkish foreign exchange.

Third, due to the rising inflation in Turkey (CPI rose 15.6% in February), the central bank unexpectedly raised the benchmark interest rate from 17% to 19%, raising interest rates by 200 basis points, while the expected rate increase was only 100 basis points. The CPI target of CBRT is 9.4% during the year, so Naci Agbal, the governor, thinks it is necessary to raise interest rates by 200 basis points to help the central bank push down inflation and achieve the above target. He vowed to reduce the inflation rate to 5% by 2023. The only dilemma facing this goal is that President Erdogan has been publicly accusing high interest rates. Therefore, only three months after Erdogan took office, he fired Aghbal because of the sharp increase in interest rates, and was replaced by Sahap Kavcioglu, a former banker and parliamentarian. The most important reason why Erdogan chose Sahap Kavcioglu is that the latter believes that raising interest rates cannot solve the inflation problem in Turkey.