[ad_1]
What will happen to tourist trips to Turkey?
The Turkish lira fell 14% after President Recep Tayyip Erdogan fired the governor of the country’s central bank.
There is a great scandal in Turkey. The director of the National Bank, Naji Abgal, who was considered a key specialist who helped raise the national exchange rate from all-time lows, was fired. His dismissal shocked both local and foreign investors, who greatly appreciated the monetary policy followed by Turkey’s central bank. As a result, there was a record drop in the Turkish lira.
Why did Recep Erdogan take that step?
Rate increase
The Turkish currency rose sharply last week after former central bank governor Naji Agbal raised its key rate by 2 percentage points to 19%, double what economists expected.
According to Erdogan, such a significant increase in the rate opens the way for an increase in inflation. Now it is above 15%.
Shahap Kavdzhioglu became the new director of the country’s Central Bank. He will become the fourth head of the Central Bank in the last two years. He is believed to share Erdogan’s views on monetary policy.
The appointment of the director of the Central Bank, loyal to Erdogan, worried investors.
“According to the Turkish president, with whom the new head of the central bank seems to agree, a high key rate leads to higher inflation. But this theory is contrary to mainstream economic theory,” said Jeffrey Galli, senior analyst at OANDA.
The high debt ratio prevents consumers from overspending and at the same time forces people to save money, he said. However, the other side of the coin is often a slowdown in economic growth.
Investors fear that the Turkish central bank’s next step will be capital controls.
What does this mean for tourists?
In a pandemic, Turkey is the main destination for the rest of the Ukrainians abroad.
On Sunday, the Union of Tour Operators of Turkey said that the country’s tourism industry at the beginning of the season will be fully prepared to receive guests from abroad.
The drop in the lira exchange rate has sparked speculation that package tours will be cheaper. However, experts do not share this optimism. Most tour operators enter into a contract in advance, mainly in dollars, so it is not worth it for now to have a reduction in the price of tour packages.
Bad example for Ukraine?
Investment banker Serhiy Fursa calls Erdogan’s actions of manually managing the Central Bank a bad example for Ukraine.
“During the last 10 years, the lyre has been falling into the abyss. Depreciated 4 times. This is worse than the situation with the hryvnia. Despite the fact that the hryvnia suffered due to war, panic, loss of territories and exports. And the lyre feels worse, why? Why is Erdogan firing independent central bank governors? Because he wants the Turkish people to be happy. No, it really does. In fact, in Turkey for a long time “I am the states”. And he believes that money should be cheap. It does not matter that. And he believes that the higher the rates, the higher the inflation. Although all the world’s leading economists think otherwise. But the sovereignty of the Turkish economy is based on what Erdogan thinks. And your court economists. They also write, as in Ukraine, about the Turkish pyramids ovgz, about evil international speculators and about the fact that we must decide for ourselves and not listen to anyone. Because there are Soros agents. And Erdogan listens to the Turkish Danilishin, Dubinsky and Shaprans, ”said Fursa.
In his opinion, it is important to understand that the Ukrainian economy does not have a margin of safety like the Turkish one. And if we want monetary stability, then we cannot afford to play those games.
