As a new week begins, we are going to see whether Central Bank measures to prevent exchange rates from going up are strong enough or not.
Ankara is delivering some strong messages about the economy while political and diplomatic scene in Turkey seems to be getting more and more heated by the minute. Their recent statement was, “We will find a fund of 210 billion dollars”, which probably seems quite high to you all. Let me explain why the Government is seeking such a huge amount of money.
In fact, Turkey has set out to find a $201 billion fund this year. This is the figure that comes forward when we add public/private debts, current account deficit and other transactions. A very little part of this fund is used for direct investments.
The truth is that we may use the Balance of Payment Account to monitor all international monetary transactions. Therefore, when the Government says, “We will receive a $210 billion fund in 2018”, their statement is not wrong. They are only stating the obvious. So, it looks like Turkey will be able to find a fund around the above mentioned amount as 2017 comes to an end. Exchange rates will rise in the event that the fund decreases or flows out of Turkish markets.
In short, balance of payment, as the name implies, is the record of all international economic transactions by a country’s residents. It provides detailed information regarding the demand and supply of a country’s currency. From this point of view, Ankara’s statement actually means, “A $210 billion currency transaction is needed for things can work out during 2018”.
What if it doesn’t mean what we think? Then, exchange rates would go up, imports would shrink, foreign currency transactions would decrease and the need for funds would naturally decrease too with respect to the former.
Would this statement cause any harm? It would not, as far as I’m concerned. Sometimes, we should reveal facts that remain not very visible to others so as to ensure what Turkey has accomplished so far is not forgotten.