LOUIS MEIXLER, AP 2004-12-31 02:02:31
ANKARA, TURKEY — At midnight tonight, Turkey will cease to be the land of the millionaires and billionaires. That is when the government drops six zeros from the national currency and Turkey loses the dubious distinction of being the country with the largest denomination in circulation, the 20,000,000 lira, worth only about $15 US.
The zeros are the result of decades of double-digit inflation that has taken the currency from 2.8 to the dollar throughout the 1950s to 1,350,000 per dollar today.
Introducing a new currency has been a Turkish goal for years.
But the government only moved forward this year, the first time in three decades in which inflation fell into single digits.
For many Turks, the new money will end the confusion of dealing in a currency in which the smallest coin in general circulation is the 50,000 and a loaf of bread can cost you 350,000 lira while a small container of orange juice costs 1,900,000 lira.
As the new year begins, that loaf will cost 0.35 new Turkish lira (or 35 kurus– one lira will equal 100 kurus in new currency), and that orange juice will be 1.90 new Turkish lira.
Right now, bigger purchases can be measured in the billions and the Turkish gross national product is a mind-bending 424 quadrillion lira or 424,000,000,000,000,000.
Officials hope the new money, called the new Turkish lira, will make it easier for international trade, which often involves trillions of old lira, and will boost confidence in the economy as Turkey pushes for EU membership.
“The Turkish lira has been like funny money . . . and now at least in cosmetic terms it will look like a real currency,” said Tevfik Aksoy, chief economist in Turkey for Deutsche Bank.
Behind the change has been stunning economic progress that helped push EU leaders in December to agree to open accession talks with the overwhelmingly Muslim country.
In 2001, Turkey was mired in its worst economic crisis in decades.
The lira plunged, inflation hit 70 per cent and two million people lost jobs.
In national elections the next year, Turkish voters kicked out the weak coalition government and gave Recep Tayyip Erdogan’s Justice and Development party a strong enough mandate to rule alone.