I know, USD/TRY keeps going up, so does the unemployment rate. Turkey is swamped with complicated internal politics. But in the meantime, we should not neglect to keep close track of current world affairs.
The British are coming to realize the terrible mistake they made when they said ‘yes’ to Brexit. London mayor Sadiq Khan has recently said, “People didn’t vote to leave the EU to make themselves poorer, to watch their businesses suffer”. I’d like to remind you that Sadiq Khan is a member of the Labour Party. However, we can see that certain influential persons or groups in UK are calling for a second Brexit referendum. As far as I understand, harsh Brexit debates are ahead for UK until March 29, 2019, when the UK will officially stop being a member of the EU.
Recently, Moody’s affirmed European Union’s AAA rating, emphasizing their faith in European countries for taking the right steps to maintain their respectability and financial strength despite the Brexit. A little reminder for you: credit rating for Germany, Denmark, Netherlands and Norway stands at AAA with stable outlook.
The trade wars that U.S. President Trump waged against China continue at full pace and fury. Imposing new tariffs on $200 billion worth of Chinese goods, the US Administration makes strange statements like, “As we are rising higher, they are falling further and further”. In the meantime, American companies benefitting from outsource manufacturing to China are facing major difficulties. From high-tech products to sports shoes, many of the largest U.S. brands manufacture in China. And only a few them have factories in China as they are just looking to reduce their cost of manufacturing. They know they cannot find a manufacturer in the United States who can provide the same quality for the same cost. It looks like the current situation will also damage companies’ profitability.
By the way, China is expected to retaliate against the U.S. very soon.
“Now a quick look at Turkey….”
Turkish Central Bank raises maximum credit card rates from next month. It seems like they have come to embrace a new strategy to reduce demand in the fight against inflation. I should say that I was expecting CBRT to take such action, especially after the recent policy interest rate rise.
We will monitor fluctuations following the latest CBRT rate hike, until the launch of Medium-Term Programme this week. Economy administration must provide support. That is essential. According to some economy officials, this programme will be quite different than the former ones. I am excited to see what the future holds!