Confused? It’s not that complicated…

As expected, Türkiye’s Central Bank decided to keep interest rates stable. However, it was new of them to impose a growth limit to control the increase in foreign currency loans. I think they finally realized the danger after the stubbornly unyielding warnings of many economists, including me.

It was also noticeable that they increased the number of required reserves in term of Turkish lira deposits and FX-protected deposits, also known as KKM. Apparently, this was a retaliation by the Central Bank for the fact that the banks took action to cut deposit interest rates whereas they have been asked to shut down the KKM deposit scheme.

I don’t know if it is wise to take actions that could increase resource costs, for fear that loan interest rates will go down, in an environment where banks and financial institutions are not very keen on lending funds. These actions taken on the grounds of ” macroprudential measures ” have affected us all. An economy going through such challenging process for years shows that there is an obvious problem that needs urgent attention.

Although Minister Şimşek said that “our economic programme doesn’t depend on carry trade”, it appears that investors’ appetite to convert their money from foreign currency to Turkish lira is not yet satisfied. And like it always does, the Government pretends like everything is fine even though it actually finds this situation quite worrying. In a country that is in desperate need of foreign funds, it is dangerous to handicap foreign currency-earning activities and chase investors off who come here, well, to invest.

Someone needs to say “stop confiscating exporters’ foreign revenue” to the officials who are responsible for running this country’s economy, who keep repeating, “If we didn’t buy foreign currency, rates would fall further down”, ” So apparently they don’t need any more foreign currency since they are now buying it from the market. So they should stop confiscating 40% of export income.

Its currency is a country’s prestige. The more valuable its currency is, the more prestigious the country is. We will all see the true value of our national currency when the short selling restrictions on TRY abroad are removed. I guess this will not be allowed until foreign investors or some privileged individuals and organisation are ready for it. Until then, some will continue to take advantage of low exchange rates.

They are trying to confuse people by technical lingo whereas in fact their plan is so simple and clear.