As a new week begins, some are already in a New Year rush, while some are getting into a New Year slow down. Towards the end of the month, trading volume will gradually shrink. I anticipate that deeper movements in exchange rates will only occur when institutions’ payment is due, especially the large ones.
So, I think it wouldn’t take a fortune-teller to say that stocks trading in a narrow range will cause USD/TRY to fluctuate thus making it hit a level of 4.00. AS I told you before, CBRT is only trying to delay the inevitable.
Expecting FX rates to climb up is not “pessimism”, for it is the reality. For the last 15 years, some people have been labelled as “doomsayer” or “chronic pessimist” while USD/TRY has been hitting record highs above, respectively 1.50, 2.00, 2.50, 3.00, and 3.50. Those who have preached the opposite were called “chronic optimists”.
“Exchange rates will go up”. You don’t a special ability to predict that. Besides, people got sick of hearing the same song over and over again for the last 15 years. As old as the Turkish Republic and nightmare of all governments since 1940s, lira’s fall is actually preventable. Ataturk stated long ago, “try not to fall too far behind the West” to avoid these malfunctions.
Governments coming and going, misunderstood his words: They were thinking that producing more than the West, or building bigger, larger, taller things than the West would help them catch up. In short, if developing countries did think about investing more in education, art, sports and science so to compete with the western countries in these fields, they would not be among the most cement consuming countries per capita income today. Sadly, Turkey is one of them.
Given the fact that an increase in prosperity can only be expected when intellectual freedom, fair competition and education become the three pillars of society, “developing” countries will always fail to develop even though they achieve high rates of growth. According to some of the world’s leading development economists, “Some countries won’t develop, because they can’t”. Are they right ? I don’t know.
But I know this: Governments have to take into account what the economists said almost two hundred years ago: “No progress is possible without investing in human capital.”
