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November currency review

For a long time now, President Erdogan of Turkey has been the lira's own worst enemy, and in November he made his most deadly attack on its value yet.

Having pretended for years to adhere to bogus economic thinking about lowering interest rates to fight inflation (rather than raising them, as most economists would advise), and sacking several central bank bosses for disagreeing, Erdogan has single-handedly brought about the relentless demise of the lira. Only last month I wrote that one euro, which had been worth only TRY3.5 five years ago, was now worth TRY11. Today, a euro is worth nearly TRY15! 

The further rapid slide in the lira's value in November (a 20% fall against the euro - see first table below) came about as Erdogan admitted that what he had wanted all along was a weaker currency in order to spur exports and manufacturing. While he has certainly achieved a devalued lira, and in some years (notably 2015, 2017 and 2021) substantial export growth, the president's words were clearly an admission that interest rates were unlikely to be raised and that he had not, in fact, ever been trying to fight inflation. No wonder it is so high! In any case, markets were seriously unimpressed and reacted as you might expect.

The idea of a weaker currency spurring trade is at least orthodox economic theory, but the downsides are also well known. The main problem is, of course, inflation, which rises along with import prices. High inflation over many years has made planning and budgeting difficult for Turkish businesses, caused expansion to be extremely volatile and eaten into the purchasing power of most Turkish citizens. Now, with the lira's further fall, some are forecasting hyperinflation and street protests are increasing. With elections looming and Erdogan losing support, he might be wise to change tack. Instead, he is urging direct central bank intervention in foreign-exchange markets to shore up the lira. In other words, rather than use the tried and tested (and cheap!) method of raising interest rates to support the currency, Erdogan would prefer to burn through billions of dollars' worth of precious foreign exchange reserves to try to hold up the value of the lira that his own actions and words are driving down.

When social, economic and political crises combine, as they seem to be in Turkey, managing expatriate staff in such circumstances can be difficult. As always, however, ECA is here to help. Our September 2021 Cost of Living Survey has just been published and reveals the full impact of inflation and exchange rate trends on your assignees' spending power in Turkey (or anywhere else!). Also just out are our updated Location Ratings, which take account of numerous factors, including socio-political trends, affecting living conditions for expatriate employees all over the world. So, whatever and wherever your global mobility issues might be, do please get in touch.

Countries experiencing largest currency losses in November


Currency code Movement v EUR
1 - 29 Nov 2021 (%)
Norway NOK -5 3.5
Russia RUB -4 8.1
Turkey TRY -20 19.9
Zimbabwe ZWL -6 54.5

Soaring inflation caused mainly by the collapse of the local currency continues to stoke the crisis in Lebanon. The 'official' exchange rate remains fixed against the US dollar at an overvalued (and irrelevant, due to lack of access) rate of USD1/LBP1507, which is why it doesn't appear in the table above. However, the 'real', or at least much fairer, value of the Lebanese pound, on offer on the black market, continued to plummet in November - the latest rate there was USD1/LBP25,000. Some organisations have started allowing their assignees to change currency on the black market despite its potential risks. However, since May the central bank has operated an online currency exchange platform, 'Sayrafa', which offers rates much closer to the black-market level than the official rate mentioned above. Since this rate is now readily accessible to assignees through commercial banks and bureaux de change, ECA has adopted it in our published indices. Again, the situation in Lebanon is extremely changeable and often confusing, so do please get in touch if you need help.

For the second month in a row, the Liberian dollar made big gains (see next table). Meanwhile, the Seychelles rupee continued its recent upward trend in some style. At the same time, both countries are experiencing significant inflation, meaning that both cost-of-living factors for international assignees in these locations are working strongly together (rather than offsetting each other, as is more common) and could produce considerable uplifts to indices and recommended pay adjustments. 

Countries experiencing largest currency gains in November


Currency code Movement v EUR
1 - 29 Nov 2021 (%)
Haiti HTG +5 12.2
Liberia LRD +9 8.2
Seychelles SCR +10 10.5

Argentina has successfully stabilised the peso in recent months (see final table below), albeit through stricter exchange controls, following a long downward slide, but analysts are warning it could be heading for a further devaluation, especially if it defaults - yet again - on its foreign debt. Divergence between official rates and those available on the black market is reportedly accelerating again - often a portent of an impending devaluation. 

Selected currency movements (v EUR)
Country Currency code % movement to 29 November 2021 v EUR since: Latest official annual inflation (%)
(1 month)
(3 months)
(6 months)
(12 months)
Argentina ARS +2 +1 +1 -15 52.5
Australia AUD -2 +2 0 +2 3
Brazil BRL +4 -2 +1 +1 10.2
Canada CAD 0 +4 +2 +7 4.4
Chile CLP +1 -1 -5 -2 5.3
China CNY +3 +6 +7 +8 0.7
Egypt EGP +3 +4 +7 +5 6.3
India INR +3 +3 +4 +4 4.5
Indonesia IDR +2 +4 +7 +4 1.7
Japan JPY +3 +1 +4 -3 0.2
Kenya KES +2 +2 +3 +3 6.5
Korea Republic KRW +1 +2 +1 -2 2.5
Mexico MXN -3 -3 -1 -3 6
Nigeria NGN +3 +4 +8 -2 17.2
Norway NOK -5 +1 0 +3 3.5
Philippines PHP +3 +3 +2 +1 4.6
Poland PLN -2 -3 -5 -5 6.8
Russia RUB -4 +2 +5 +6 8.1
Singapore SGD +1 +3 +4 +3 3.2
South Africa ZAR -3 -5 -9 -1 5
Sweden SEK -3 -1 -2 -1 2.8
Switzerland CHF +1 +3 +5 +3 1.2
Turkey TRY -20 -29 -25 -33 19.9
United Kingdom GBP 0 +1 +1 +5 4.2
United States of America USD +3 +4 +7 +6 5.4
Venezuela VES -3 -6 -27 -78 1946
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