My prediction for the next few months (basically an outline of an article I’m too lazy to write):
- Increased violence against bank branches as people stop accepting discretionary & decentralized capital controls.
- Increased security presence (ISF, Army, & Private Security)
- Increased violence against bank branches as people stop accepting discretionary & decentralized capital controls.
- Increased security presence (ISF, Army, & Private Security)
- Security measures insufficient as crowds start getting bigger & more violent.
- BDL releases Lira liquidity to quell the anger.
- People would be able to withdraw as much Lira as they like from their $ accounts at 1515.
- BDL releases Lira liquidity to quell the anger.
- People would be able to withdraw as much Lira as they like from their $ accounts at 1515.
- This releases their anger, even though when they go to Sarraf, they’re losing a chunk of their savings. This is effectively a voluntary haircut.
- Excess Lira in the market chasing scarce dollars => $ goes to 3,000, then 5,000, then 10,000, while official rate is still 1515.
- Excess Lira in the market chasing scarce dollars => $ goes to 3,000, then 5,000, then 10,000, while official rate is still 1515.
Big divergence between official and parallel Lira rate => more arbitrage, thereby incentivizing anyone who gets the official rate to cheat => more shortages of basic products like fuel, medicine, and grain.
This puts more pressure on announcing that the old peg is officially gone, even though it’s been gone for months now, for all practical purposes.
