Turkey’s Erdogan Meets El Salvador’s Bitcoin-Boosting Leader Amid Economic Crisis

ISTANBUL – Turkish President Recep Tayyip Erdogan met with the leaders of El Salvador, the first country to make a legal bid to buy bitcoin, on Thursday.

Turkish and foreign investors met Mr. Erdogan and President Nayef Boker in Ankara last month as El Salvador plans to launch a bond backed by $1 billion in bitcoin. Instead, the Turkish government has been watching carefully to see if it will change the way cryptocurrency is viewed. Bitcoin depreciation in dollars.

At a press conference following a meeting at the Presidential Palace in Ankara, the two presidents praised each other’s leadership, but neither of them mentioned cryptocurrency.

“You have a great leader,” Bukele said.

The Turkish government has taken a restrictive approach to cryptocurrency in recent years, but analysts expect Mr. Bukele to advocate the use of cryptocurrency during meetings during times of Turkish economic turmoil. more. The Turkish lira lost about 40% of its value against the dollar last year, causing occasional protests and threatening the financial stability of 20 NATO groups and countries.

Separately, Turkey’s central bank maintained its record weekly repo rate at 14% on Thursday. The authorities cut interest rates for the fourth consecutive month, accelerating the currency’s collapse.

Prime Minister Erdogan has demanded low interest rates as part of his unconventional strategy to drive economic growth and has fired nearly all Turkish officials who opposed his vision. Last year’s interest rate cuts drove up inflation from cheaper lending and pushed the prices of key imports like food and energy higher, while reducing the purchasing power of the lira.

Turks have piled into cryptocurrencies to offset inflation and the sharp depreciation of the lira. The meeting with Mr. Bukele will take place when Prime Minister Erdogan stated that he is proposing a new law to regulate early-stage assets. Turkey banned cryptocurrencies as a payment method last year, but Mr Bukele’s government adopted bitcoin as the world’s first national currency.

Mr. Buquere has been one of the leading supporters of cryptocurrency in the world, and analysts expected him to raise the issue during a meeting with Mr. Erdogan, but the Turkish government will change its position on the issue. I don’t know if that’s the case.

“As management, I am confident that they will raise the issue of bitcoin because they are advocates for the sound of bitcoin,” said Turan Sart, a consultant for Turkish crypto exchange Parisb. I. “They might listen to him, but I don’t know if it will have a big impact on the thinking of the Turkish administration.”

The two leaders exchanged tweets on Twitter with each country’s flag applauding. Bukele wrote: Visit it in TurkishMr Erdogan Written in Spanish The state attached great importance to this visit.

“I greet everyone in Turkey from El Salvador, the land of #Bitcoin,” Bukele said.

Elected leader Erdogan, who has eroded Turkey’s institutions and oversaw a crackdown on political opponents, enjoys warm and personal relationships with dictatorial leaders around the world, including Russian President Vladimir Putin. ..

Elected as a political outsider in 2019 amid discontent with violence and poverty, Mr. Buquere is the Biden administration’s as he rushes to rule the country on behalf of Constitutional Court officials and its lawyers. Face criticism in general.

El Salvador sees Bitcoin in part as an opportunity to decouple from the dollarized economy, the country’s other fiat currency over the past two decades.

During his visit to Turkey, Mr. Boker said he spoke about strengthening Turkey’s support for infrastructure projects in El Salvador, including the participation of Turkish companies, including the construction of ports and geothermal power plants.

“Our support for El Salvador will continue,” Erdogan said.

In recent years, Turkey has weakened its foreign exchange relations, reduced foreign currency debt, and encouraged local residents to trade the lira for gold and other currencies.

However, those efforts faced challenges. Recent initiatives that have encouraged locals to lock in lira deposits for at least three months have sparked little demand. Turkey’s central bank recently expanded its program to companies to increase participation.

El Salvador has become the first country in the world to adopt Bitcoin as its national currency, allowing people to pay for their daily needs using a digital wallet. A dangerous experience in a poor country looks like this: Photo: Marvin Recinos/AFP/Getty Images

Investors and analysts say investors and analysts continue to pressure the lira due to high inflation and that local residents continue to transfer funds into foreign currencies, gold and other assets, despite the central bank keeping interest rates. I expect that.

“With inflation rising, there is still demand for foreign currency,” said Phoenix Skalin, strategist at Societe Generale.

Turkey’s annual inflation rate will rise from 21.3% in November to 36.1% in December, and economists expect official figures to rise to 50% in the coming months.

“We will live in the very difficult quarter of 2022. It will be very difficult for the Turkish people,” said Turkish economist Mustafa Sonmes.

write in Jared Malsin ([email protected]) and Kaitlin Ostroff ([email protected])

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