I was bombarded with one question last week: “What’s causing these fluctuations in USD/TRY pair?” So, I started to make the following joke whenever I receive calls from my friends I haven’t seen for a long time, but who happen to call me in such times of need:
“For Exchange Rates, press 1; for Interest Rates, press 2…”
Sometimes, they wonder whether their call was actually routed to a call centre, or sometimes they burst out laughing when they hear me talk like a call centre rep or something. But, after a few seconds of astonishment, when they pull themselves together, I get straight to the point.
First of all, from London to New York, and Far East, in many global stock markets, TRY is being sold short and there are many people making good profit out of it. In such a way that an investor who can put up 100 million$ as collateral will be able to make billions by short selling liras. Considering that the investors, when closing positions, they usually end up buying once this short selling trend is over and TRY starts rising again in response, I think you can guess how much money people have made in just 12 hours, during the last week’s fluctuations.
“In a fertile environment for making money, you can’t blame those looking out for their own interests…”
One night last week USD/TRY dropped from 4.95 to 4.79. This buy-sell action brought a profit above 3%, which means, apart from the fact that there is huge impact of leverage, those who sold at 4.95 with 100 million$ and bought at 4.79 made a total profit of 16 million TRY, even though the amount they traded was equal to the collateral amount. You can’t even dream about making so much money in just 12 hours. This movement I just depicted above in details has also demonstrated a rise within a band of 4.51-4.95. ıt’s exhausting even to calculate the amount of money gained by those who made a double profit. Of course, no one is that lucky to get opportunities all the time. But there is a fertile environment for making good money.
I don’t know who won on that night, but I do know that it is Turkey that loses every time.
People have almost gone out of their minds when I explained them how things went down on that night in stock market. I told that it is not possible to take any measure against this phenomenon yet it may be possible for the economy administration to solve the problem with less talking and more doing. “You buy expectations and sell the ones that are realized” This was one of the most popular mottos of the 1990s. Today there is an entirely different scene. Today, people buy the reality.
In short, markets can only be eased through action, not promises.