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Security Brief: IFET Week of November 22, 2021

Week of Monday, November 22, 2021 | Issue 51

Mark Kleszczewski, Illicit Finances and Economic Threats (IFET) Team

Mimi Aram-Walker, Editor; Clea Guastavino, Senior Editor

Turkish Lira Coin and Flag[1]

Date: November 23, 2021

Location: Turkey

Parties involved: Turkish government; Central Bank of the Republic of Turkey (TCMB); President Tayyip Erdoǧan; Justice and Development Party (AK); European Union (EU)

The event: The Turkish lira plunged by more than 15% on November 23, 2021, after President Tayyip Erdoǧan defended recent interest rate cuts and vowed to win his “economic war of independence,” despite widespread criticism and pleas to reverse course. The lira tumbled as far as ₺13.45 TRY to the US dollar, reaching record lows for an eleventh straight session, before reaching a final market close 10.2% lower, at ₺12.7015 TRY. The Turkish lira has lost 42% of its value this year, including a more than 22% decline since the beginning of last week.[2] Turkey’s Central Bank (TCMB) responded that it has no commitment to any exchange rate level.[3]

The implications:

  • It is very likely that Turkish consumers and businesses will shift toward US dollars and euros as a medium of exchange to prevent further losses resulting from currency depreciation and escalating inflation. If Turkish businesses convert their lira into euros to prevent financial losses, there is a roughly even chance that relations with other EU member states will improve. However, due to the current political climate in Turkey under President Erdoǧan's government, it is unlikely that this will result in a speeding up of Turkey's ascension into the EU.

  • If the currency plunge continues to deepen, indicating an impending currency collapse, it is likely that holders of lira and foreign hard currency will seek to store their funds in stable countries outside of Turkey to prevent loss of their savings and financial assets.

  • If Turkey’s foreign cash reserves become depleted at an excessive rate, there is a roughly even chance that the Erdoǧan-led government will seek out foreign investment or lines of credit from non-Western sources, such as the United Arab Emirates (UAE), to bolster the country’s Treasury. If Turkey and the UAE were to engage in deeper financial cooperation, it is likely that funding would be asymmetrical and the UAE would be the initiator of investments in hard assets and strategic sectors of the Turkish economy, due to Turkey’s relative weakness and higher risk profile.

  • If the TCMB continues to refuse to raise interest rates, it is very likely that the lira will remain at record lows and inflation will climb throughout 2022, negatively affecting the popularity of the AK Party leading up to the Turkish elections in mid-2023.

Date: November 23, 2021

Location: India

Parties involved: Prime Minister Narendra Modi; Indian Parliament; Central Bank of India

The event: Prime Minister Narendra Modi's government is preparing to introduce a bill that would regulate digital currencies. A description of the bill outlined a plan to “prohibit all private cryptocurrencies in India.” The bill also says it would allow for certain exceptions to promote the underlying technology of cryptocurrency and its uses. The Modi government also wants to help the Central Bank of India create an official digital currency, according to the notice posted about the draft legislation.[4]

The implications:

  • It is very likely that India’s announcement follows that of other countries currently pursuing pilot programs in setting up a national, digital currency.

  • It is likely that if bans and strict regulations are applied to cryptocurrencies there would be substantial barriers to implementation, as it is very likely that millions of Indians are already using cryptocurrencies. Unless a legal amnesty framework was included in new laws, regulation would likely require commitment of significant budgetary resources to fund large-scale identification, investigation, and surveillance of current holders of cryptocurrency by Indian law enforcement authorities.

  • It is very likely that a crackdown on cryptocurrencies would affect short-term prices of leading cryptocurrencies but not dampen end-user demand for cryptocurrency trading in India, or long-term crypto asset prices worldwide. A ban would almost certainly increase growth of overseas exchanges and third-party brokers catering to Indian-based investors.

  • If there were to be a full-out ban outlawing cryptocurrency mining activities in India, it would likely further accelerate the migration of cryptocurrency mining to locations such as Russia, Kazakhstan, and the state of Texas in the US, where these actions are more welcome. Such moves are likely to spike short-term demand for data center equipment and construction in the US, while placing additional stress on regional electrical infrastructure and the environment over time.

Date: November 26, 2021

Location: USA

Parties involved: US government; US Strategic Petroleum Reserve (SPR); US Oil Companies

The event: Oil prices tumbled to the lowest price level in more than two months on November 26, 2021, as the new Omicron COVID-19 strain, detected in South Africa, sparked fears about a demand slowdown. This comes amid a broad sell-off in the market with the Dow dropping more than 900 points. US oil settled 13.06% lower than the key level of $70 USD, at $68.15 USD per barrel. West Texas Intermediate (WTI) oil also closed below its 200-day moving average, a key technical indicator, for the first time since November 2020.[5] The drop occurs shortly after the Biden Administration’s November 23, 2021 release from the US Strategic Petroleum Reserve (SPR) as part of ongoing efforts to lower prices and address lack of supply around the world.[6]

The implications:

  • It is likely that the US government will not pursue another release from the country’s SPR, as they have done so already shortly before the drop.

  • Regardless of the recent price drop, it is likely that oil production and the petroleum market will continue to be affected by higher transportation costs, the slow resumption of drilling capacity, and the ongoing lag in supply availability of refined petroleum products relative to increased consumer demand.

  • Domestic US oil producers, including shale oil and hydro-fracking companies such as Chevron and ConocoPhillips, are likely to continue to face cash flow pressure resulting from ongoing price volatility and opposition from environmental advocates, leading to limited new supplies from such industry operators.

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[2] Turkish lira in historic 15% crash after Erdogan stokes fire sale, Reuters, November 2021,

[3] Press Release on Market Developments (2021-50), TCMB (Central Bank of the Republic of Turkey), November 2021,

[4] India sows confusion with plan to ban 'private cryptocurrencies,' CNN, November 2021,

[5] Oil drops 13% in worst day of 2021, breaks below $70 as new Covid variant sparks global demand concerns, CNBC, November 2021,

[6] President Biden Announces Release from the Strategic Petroleum Reserve As Part of Ongoing Efforts to Lower Prices and Address Lack of Supply Around the World,, November 2021,



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