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The optimistic atmosphere that dominated the markets until Thursday of last week dissipated with the decision of the Central Bank not to raise interest rates. The dollar rose above 8.06 and the euro above 9.54 and renewed its all-time highs. Experts believe that the Central Bank’s decision is the most important reason for the depreciation of the TL. The amount of debt from the US elections in Turkey and is one of the most important causes of pressure on the Turkish lira.
one) DECISION OF INTEREST OF THE CENTRAL BANK
IYI Party Development Policies Chief Economist Prof. Dr. In his statement on the matter, Ümit Özlale said: “I believe that this level of the Turkish lira is the result of incompetence, not the desire to be competitive.” used expressions.
Özlale, who sees the Central Bank’s decision not to raise interest rates as one of the risks above the dollar, said: “Today, a student who has taken basic economics courses at any university knows that in a country without a surplus of foreign trade, suppressing interest rates and the rate at the same time without lowering inflation and the risk premium will invite crisis. he said and continued as follows:
Turkey’s main research and human capital facilities is one of the institutions with the Central Bank in this case, I do not know. So, the only explanation that comes to mind to man, the only two politicians in the world believe that “inflation is the main cause” of the independence rhetoric not long ago that the Central Bank was going to test the ingenuity in Turkey . We pay the cost of this as businesses on the brink of rising inflation, rising interest rates, chronic unemployment, and bankruptcy.
IYI Party Development Policy Chief Prof. Dr. Umit Ozlale
Stating that current and competitive surplus countries prefer efficiency-oriented policies rather than devaluing their currencies, Prof. Özlale said: “Furthermore, there are major inconsistencies between the competitive exchange rate discourse now advocated by the Minister and which it did at the end of 2019. Since the depreciation of the Turkish lira would bring us competitiveness, why have billions of dollars been spent on CBRT reserves to avoid the depreciation of the Turkish lira since the end of 2019? Or why were public banks asked to create open positions in foreign exchange at enormous risk? ” I ask.
“ANNOUNCED PROGRAMS ARE LOSS OF MEANING”
Stating that the exchange rate target for the next two years was exceeded in the new economy program, Prof. Özlale said: “The Central Bank’s inflation forecasts will not be kept up to date. Also, this is not the first time we have encountered this situation. The programs that the minister announces as new each time lose their meaning before a month passes. Today, the economy administration, which borrows at an interest rate above 6 percent in dollars and imposes an additional interest cost of at least 40 billion TL in this state because it cannot read economic developments, has not been able to speak about the “interest and currency lobby”. He said.
Stating that geopolitical risks must also be addressed, Özlale said: “There seems to be a desire to charge the costs of these wrong decisions made in the field of economics once again on foreign policy developments. There is no counterpart to this in the citizen and business world. “He used the expressions.
The economist Dr. Murat Kubilay
two) EXPECTATIONS OF THE OFFER TO BE PRESIDENT
Speaking to Sozcu.com.tr, economist Dr. Murat Kubilay said that the US elections put pressure on the Turkish lira. Stating that it may cause problems for foreign currency debt companies to maintain their financial power, it is not sustainable to continue in this way. Kubilay said: “The economic management is implementing policies that growth has come before. In the coming days, if the Central Bank does not take additional measures, it will proceed in this way.
It will rise again, of the cases of virus crowning in Europe, worsening of the situation in Turkey and very probably even without the presence within the facilities of the closure and candidate of the Democratic Party in the presidential elections of the United States, the possible victory Biden’s election was putting pressure on the Turkish lira. The Central Bank at this point until November 19, the date of the next dry meeting, will try to keep it at a reasonable level, but in Turkey, due to the fact that it is exploded, the adequate measures are not taken to do so, the increase will also become inevitable. of TL’s loss of value. “found in the description.
Stating that there was disappointment in the markets and that there was a rise in the dollar exchange rate, Dr. Kubilay said: “On the other hand, by increasing the weighted average financing rate and keeping the real interest rate higher , so far this disappointment has been prevented from turning into a swift speculative attack. So, as the Turkish lira continues its steady depreciation in recent months, you don’t see big quick jumps.” He said.
The US presidential elections are approaching, the survey results affect the currencies of developing countries such as Turkey. The British Financial Times newspaper noted that the expectation of Joe Biden being elected negatively affected the TL and the Russian ruble, and that the currencies of other developing countries and the TL and the ruble were moving in different directions.
3) THE CONCERN ABOUT TURKEY IS NOT THE PAYMENT OF THE DEBT
Faculty member of the Department of Economics at Yalova Assoc University. Dr. Demirel Maintenance emphasized Turkey’s debt.
Assoc. Dr. Demirel said: “The most important concern is that so much debt cannot be paid in global circles. The roughly $ 120 billion lost to not raising the exchange rate also heightens these concerns.
The recent uncertainty created by the Central Bank about the interest rate increases the pressure on both the interest rate and the exchange rate. Confidence in the Center’s policies waned. He lowered the interest rate from 24% to 8.25% very quickly. However, you cannot put it in the same way “. Found in the description.
Faculty member of the Department of Economics at Yalova University Asoc. Dr. Baki Demirel
4) GEOPOLITICAL RISKS ARE FOLLOWED
Among the closely monitored developments in the market, in addition to the CBRT decision, the US elections, Brexit, the trend of the global and local increase of the corona virus, the concern of a new escalation with the EU, the tension between Azerbaijan and Armenia and the ongoing process regarding the S-400 air defense systems.
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