As expectations that the next Fed Chair and Vice Chair will be elected from among professional executives who had served in financial markets for years are increasing faster than ever, we are witnessing that the parity has suddenly hit a level of 1,18; which inevitably caused Euro/TRY to hit record highs in Turkey, however, the fact that USD/TRY is climbing up too is not a good sign. In my previous reports, I had mentioned that a rise in currency basket would lead to a hot demand for foreign currency.
Both the Fed and political/diplomatic uncertainties cause exchange rates in Turkish markets to go up unceasingly. It looks like a nerve-racking wait is about to begin for those in Euro denominated debt.
During the summer, I had to warn a lot of institutions about exchange rates: “Don’t let their calmness fool you”. Those in foreign currency denominated debt, or for that matter, in euro denominated debt, including football clubs, will have to revise their balance sheets.
Considering exchange rates movements may generate a change on two sides of the balance sheet, everyone is feeling confused again as year-end approaches. Experts, who considered some large holdings’ exchange rate forecasts “too high to be true”, now prefer to make no comments about the current level of exchange rates; because… What else can they do?
As I have always said, you should ask, “What may we face during the year?” instead of wondering about the end of year exchange rates. It looks like I turned out to actually be right again this year when considered from this point of view.
It’s neither magic nor witchcraft. Science, experience and common sense… These three are the major factors that enable my predictions to get proven right. You should try it sometime. Cause, it’s free to try!
