A new week kicks off amid tensions. Markets look quite upset because of US President Trump’s tariffs decision that may trigger global trade wars.
The morning starts with the highest level USD/TRY has hit since the recent year while basket currency tests the highest level of all times. Only benchmark rate maintained its level of 14.34% which has been tested before. But, as of this morning, it stands at 14.11% whereas it has been trading at 11% a year ago.
But, is it really advisable to say, “Turkish lira does not depreciate, only American dollar appreciates” First, let us check if there’s really justice to this argument before asking, “What on earth does that mean?”.
Turkish lira has depreciated 115% against USD over the last 5 years. Any of its emerging counterparts has experienced such massive depreciation. As I have mentioned above, Euro gains in value as well given that currency basket keeps continuously moving up. Then, we can easily say that TRY is depreciating. There’s also another fact that Turkey is standing out negatively among other emerging markets in respect of other parameters as well, including current account deficit, inflation, interest rates, unemployment.
Currently, Turkey has two things to be proud of: Public sector balance and growth. While public sector balance manifests signs of deterioration, considering central government’s massive domestic debt stock and large primary budget surpluses, growth, on the other hand, seems relatively fine for the moment. But it looks like the price of growth in Turkey is high private sector debt and high inflation.
“How about we try something different?”
It would be better to go for another type of explanation instead of saying, “Economy is just fine. The things we’re going through right now, they’re happening because of the conjuncture”. If I were an economy official, I’d say this:
“Turkey faced a nefarious attack on 15 July 2016 when it was trying to establish a balanced policy between the Easy and the West. It has simultaneously combatted terrorism and those who intended to end the Republic. Most of allies have turned their backs to Turkey. We had to come up with alternative models to ensure the survival of the country and preserve the diminishing funds. But, some became displeased about our efforts. We admit that sometimes we implemented wrong economic practices. But, we did the best we could, all alone. Despite all kinds of attacks against our country, from commerce to banking, everything is going like clockwork in Turkey. Terrorist groups swarming into our borders are a massive threat, not only to Turkey but to Europe as well. Supporting these hotbeds of terrors is an affront to humanity. But, despite all struggle, we have never given up. Today, the reason our people can go to shopping malls without fearing for their lives, and the reason that schools, hospitals, airports, tourist facilities, offices and transportation, they all operate seamlessly is because Turkey showed massive efforts to make that happen. Although the fact that you may not like us or approve of us breaks our heart, we will continue to work for our country. If you think we are making mistakes about our preferences or priorities, you should avoid disdain and find a more reasonable way to tell us this.”
It’s that easy! But the voice of your tone, the place and time you choose to say it are also important so that your words can create an influential power.