Turkey-U.S.-Russia Triangle…

As I always say, the direction of exchange rates is determined by the politics, its trend, however, is determined by economic parameters. Recently, FX rates have been showing an upward trend. Let’s see why…

As people have been voicing their expectations about a major cross-border operation for the last week, I firstly tried to furnish some answers, prior to which, I took a look at Prof. Dr. Çağrı Erhan’s article titled “What Do We Expect from the Safe Zone?” of August 18, published in Türkiye Newspaper. The article presents a fair and proper analysis of the complex conflict in Syria.

After having read the article and consulted with experts on the matter, I came to the realisation that it’s highly unlikely for Turkey to carry out any military operation until the formation of the safe zone. However, Turkey is currently not on very good terms with Russia due to regional conflict while the dialogue between Turkey and the U.S. is still very poor.

In the meantime, as the dialogue between the U.S. Armed Forces and Turkish Armed Forces still continues through the CENTCOM, the United States integrated NATO’s Allied Command. Due to conflict between CENTCOM and TAF, apparently the U.S. has decided to take the issues under control in collaboration with NATO’s Allied Command, Europe, in order to sooth tensions, but it can be clearly observed that the United States won’t budge an inch, which means, although all of this seems like positive news at first, America’s approach to the matter doesn’t seem to have changed at all.

“Highly charged political debates, again…”

Meanwhile in Turkey, government has been making moves to start probable changes in ministerial cabinet. While some of the ministers disagree on same matter, the others deliver totally different statements. By the way, I can’t help but notice those experts promoting conspiracy theories for each and every incident, including huge forest fire in Izmir and terrorist attacks in Diyarbakır. I hope these matters were all on the agenda of the cabinet meeting yesterday.

Apparently, the reasons underlying the recent rise in exchange rates are not at all economic. We all know by now that Turkish convoy in Idlib, Syria was hit by Russian airstrikes. Turkey claims that the airstrike hit its convoy, killing civilians; however, a war monitor says a Russian airstrike took the lives of rebels in the surrounding area.

So, I think I would not be wrong in saying that, rather than CBRT’s moves, it is this regional conflict that causes FX rates to rise. We should however admit that this turmoil has first started in Argentina, and then continued to grow with global recession fears and finally released banks’ balance sheets. It is the economy once again that sets the new trend.