As tensions between the United States and Turkey over Turkish operation into the northern Syria are put at ease the moment, EU countries that have been doing sneaky stuff behind others’ back continue to making attacks in a complete state of panic. In the meantime, British PM rallies MPs to vote for his deal and get Brexit done.
For further details on this matter, you may refer to my article published in “Pencere” newspaper which published its very first issue today.
Markets seem to be calmer after Syria’s agreement to conditional ceasefire. There’s been a significant decline not only in USD to TRY rate but also in benchmark rate. As for the resistance of Euro to TRY rate, it is caused by Euro’s appreciation against US Dollar as a result of positive news on Brexit. However, things got worse again over the weekend. If the United Kingdom requests an extension again, market balance will change one more time. Let me remind you that other factors are needed to determine Euro to TRY rate as it is calculated by multiplying USD to TRY rate with Euro to USD rate, which means Euro to TRY is the dependent variable. “Dependent on what” you may ask. Well, dependent on the US Dollar, obviously.
“My new book coming soon…”
I have delivered conferences in three different countries since the last week. I will be preparing for another meeting in Antalya as you read this report. Long story short: although ties between the US and Turkey seem to be improved now, some key economic problems are still waiting to be solved. In my upcoming book, I tried to explain the causes of this very situation from a social, economic and political perspective. I’ll have the chance to chat with my readers and have a little brainstorming with them at TUYAP International Book Fair on our November 10th, our Great Leader Mustafa Kemal Ataturk Remembrance Day.
The book tries to explain where Turkish economy went wrong while explaining the reasons why Turkey is so vulnerable to exchange rate attacks.
As a matter of fact, Turkish economy is considerably vulnerable to external impacts as it can’t achieve GDP growth without running current account or budget deficit. Government spending does not stop which leaves the government with no choice but to impose higher taxes and borrow from its citizens to collect funds. There’s only a very slight amount of funds left for the households and private sector. Ignoring Turkish lire, people turn to foreign currency due to their lack confidence in the economy as well as their lack of foresight. Under such circumstances, it is the political affairs that would obviously determine the direction of USD to TRY rate while trend would be set by the key parameters of the economy.
Isn’t only natural that people do not prefer investing in lira considering their concerns about Turkey’s domestic and foreign policies as well as the key parameters of Turkish economy? The fact that we avoid discussing this matter thoroughly as it should be unfortunately leads us to a vicious circle. Surely, Turks would still ask about the situation with dollar even if an asteroid hit the earth. Apparently, “What will happen to us?” and “What will happen to dollar?” have the same meaning according to Turkish people.