First of all, let me remind you of a technical fact: investment instruments eventually reach the peak levels they have hit before. Sometimes this journey takes years, sometimes it happens faster than expected. For example: gold price surpassed $400 in the 1980s, then fell sharply to $100. For almost 27 years, it caused great stress to investors, but these days it is traded for $2000.
The same is true for USD/TRY exchange rate. Sooner or later, the duo will return to its record high levels. Because there are enough reasons for such rise: foreign exchange reserves, current account deficit, monetary policy and interest rate policy, high inflation, global economic and political conflicts. Therefore, unless these reasons are eliminated, it is inevitable that exchange rates will continue to go up.
When you compare the 5-year retrospective chart of the USD/TRY exchange rate with the comments that were made on the dates when the exchange rate peaked and fell, you really cannot help but laugh. For example, a bank’s general manager said, “The currency basket will not be allowed to exceed TRY 4.” Today, it’s over $15. A real sector representative said, “Thanks to the currently implemented programme, the dollar will permanently remain below TRY 7”. Yet the situation is quite the contrary today. The highly inaccurate comments made by politicians and economists about the fall or rise of the exchange rates sadly encouraged investors to buy dollar when the USD/TRY rate rose to TRY 18, but they kicked themselves later for doing so.
“Foreign Exchange Movements Should Not Be Surprising”
However, we have also seen that those who bought foreign currency at peak prices then sold it hastily at a loss, later regretting their decision because the exchange rate reached the same peak level after a while. The truth is investing is not something to be taken lightly, or to be done in a hasty manner. Only people who can manage to stay calm and buy currency when the price is stable can earn serious money. Patience is the key.
The same goes for the gold investment. The gold price per gram steadily remained at TRY 500 for a very long time. Yet most investors waited too long to see whether the price would drop any further. Those who bought gold when it hit TRY 1000 unfortunately sold it at a loss later. Gold price is testing the same levels again today. Regretfully, there is a serious lack of financial literacy in Turkey. But somehow everyone is a speculator. And they firmly believe that they can buy for the lowest and sell for the highest price.
For further pieces of advice about investment, you may check out my latest book “Re-Introduction to Economics”, now in its fourth edition. In my previous book, “Exit from Economics”, I had offered a number of suggestions to decision makers. Realising that they do not have the intention to listen to my counsel, now I am trying to help ordinary citizens with their investment decisions. But even the citizens do not listen to the experts, then no one has the right to be angry with the politicians.