Not a bald move.. This was a must

Not a bald move.. This was a must

It is obvious that Central Bank made some suggestions for Ankara:

Raise the interest rates to calm for exchange rates

Hold the interest rates and let the exchange rates rise

Of course, the government decided not to let the exchange rates rise as the local elections approached. Because when the dollar rises in Turkey, everybody thinks that things are not going well. Therefore, holding the exchange rates is a politically correct move for governments in Turkey, never a wise move for an economist, of course.

However, right after the policy rate rise announcement the market did the move for some minutes and after that we saw a significant decline in dollar TL. Most probably the selling was conducted by the Central Bank and the side effect was more decline in the net international reserves. We will see how much they sold after the official release of the updated Central Bank reserves. Before this move the number was around -$75 billion.

Most of the analysts called this right rise as a bold move. Frankly, this makes me smile, because most of those analysts make those comments for servility. The motivation for this servility is most of the inside information from Central Bank officials, sometimes a post in the institution, or simply to flatter the friends over there. This is all mentioned in the book “on liberty” by John Stuart Mill in the 19th century. The habits never change.

Don’t know who benefited from this rate rise, and falling dollar but we know that all these moves are for the local elections. The central bank plays itself and dances itself, except some foreign institutions and local analysts nobody promotes the current monetary policy.

Frankly, we can hardly understand the support of some international finance institutions, as the central bank tries to hold the for exchange rates and shows no proactive effort to match the policy rates with inflation. Maybe this support depends on tourism revenues in summer, or more swap agreements after the elections. Very intangible, in my point of view.

Probably, CBTR you don’t like to see that the dollar TL goes up to 35 and all the maneuvers are for saving the day before the elections. Also shows that the Central Bank helps the government and shows no independency. of course this is not shocking for most of us.

We are all very curious the very first day after the local elections.

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