Half the World Knows Not How the Other Half Lives

 
Some International Financial Institutions have been warning Turkey against fully liberalising the swap channels. Apparently, foreign investors are not yet ready to say goodbye to Turkish treasury bills and government bonds and they want to continue making profit through carry trade.
 
Recently, it has been claimed that the Turkish Banks operating abroad were the ones who have purchased most of the Turkish government securities. So we could suppose that the rest was bought by significant foreign investors who are apparently afraid of the complete liberalisation of TRY swap transactions. This reveals the responsible parties who support the Government’s wrong foreign exchange policy. It is not possible to maintain continuous control over foreign exchange. However, what keeps this control going is the fact that it guarantees high interest rate and high foreign exchange earnings. We see that the government propaganda is getting stronger so that the calls and warnings of us economists suggesting a free-floating exchange rate system remain ineffective. The Government continues to make people engaged in carry trading happy at the expense of losses by our own exporters, industrialists and business people, and suffering of our own citizens. Why ? Simply to cover up how wrong their economic policies are.
 
By the way,  the fact that the Turkish Central Bank has been replenishing its FX reserves makes me both happy and worried. It makes me happy because that's the way it should be. We need to have a strong FX reserves against external impacts. But it makes me worried at the same time because the possibility that these reserves could be sold off cheaply to investors seeking high profits is increasingly growing.
 
According to latest data, economic slowdown required for disinflation is not happening. This situation could unfortunately revive the argument used by the Government 10-15 years ago: "There is no need to compromise on economic growth to bring inflation under control. But one thing is clear that inflation rate is supposedly falling because Turkish Statistical Institute is manipulating the figures, and GDP continues to grow one way or the other.  
 
The new team at the Central Bank, which was appointed to make drastic changes, has not changed anything so far. This means that we are experiencing the same problems that we have been experiencing for the last five years. The only difference is circumstances have become more difficult. 

Prof. Alkin