Who will be left standing when the music stops?

We are going through tough times that call for cautiousness. Companies in Turkey have been borrowing in foreign currency at great quantities. While the Central Bank’s foreign exchange reserves have been slowly replenishing, foreigners are purchasing bonds also in great quantities. If the exchange rates remain stable, foreigners and locals could make some serious profit. However, there are some curious developments that must be overlooked.   
 
For instance, the international financial institutions have been speaking more positively of the Turkish economy lately, whereas before, they have been claiming that Turkey could not attract foreign capital because of the current state of its legal system and justice. The interesting thing about this change of heart is that the problems that they have been worried about remain unresolved. I wonder the reasons behind this sudden fund inflow into  Turkey?
 
First of all, this incoming money is not of stable nature. As the number of Turkish companies taking advantage of the decline in Turkey's CDS premiums hence borrowing cheaper money from abroad keeps increasing, those who do not have this kind of connections or means began to borrow in foreign currency domestically.
 
Actually, there will be no significant decline in inflation rate. This is merely a plan relying on an anticipated 20-bps decrease in CPI towards the end of summer because of the base effect. Foreigners who buy bonds when interest rates are high expect the Central Bank to cut the policy rate so as to double their profits.
 
The fact that Turkish companies are borrowing excessively in foreign currency could have something to do with the international financial institutions’ forecasts, saying that one US dollar will be 45 Turkish liras in a year”. Most likely, companies think, "It is better to get a foreign currency loan than a TRY loan with 65-70% lending rate." Banks too find it easier to lend foreign currency loans to borrowers.
 
Considering their asset composition, it is quite normal for banks to offer foreign currency loans, but this practice has obviously nothing to do with a tight monetary policy. While the money supply is growing rapidly by means of both deposits and loans, people responsible for managing the economy do not give any hints as to how they intend to control effective demand.

As I mentioned above, the whole plan is based on a 20 basis points fall due to the base effect, and when this happens, they will boast that they were right the whole time. More difficult days are yet to come. So, try not to miss today’s opportunities.