EXCHANGE-RATE STABILITY DEPENDENS ON THE POLITICAL INDICATORS

19 JANUARY 2014

The economists believe that the fate of the Turkish Lira depends on the political indicator, by referring to the rapid increase in foreign exchange rates as a result of Dollar exceeding 2 TL and Euro 3 TL. The economists dwell on two options, they say, “Either the politics settles down, and the dollar gains stability even it does not get back to 1.92 TL, or this chaos continues and we all lose.”

Halit Soydan, Lecturer at IUE Department of Economics, and Former Managing Director of Yapı Kredi and Garanti Banks, presented his opinion on the rapid increase of foreign exchange rates recently, and he stated,
“The dollar, which skyrocketed in May 2013 due to Gezi protests and ‘tight monetary policy’ undertaken by the Federal Reserve, has settled down early in December 2013. The ‘crystal globe’ revealed stability. But the Anatolian Peninsula was struck by lightning twice. First, the FED officially announced its decision on ‘10 billion dollar brake’, and then came the serious accusations on December 17, 2013. It has been a total chaos. And the foreign exchange got uncontrollable!”

‘Stability or we lose!’

Halit Soydan pointed out that Turkey had two options to consider nowadays. He stated that in the event of politics settling down, the dollar would gain stability even if did not go back to 1.92 TL rate. The first option would be for the benefit of Turkey, he stated and “Second option is that this chaos would continue and we all lose”.

‘Wish I invested in foreign currency’

Halit Soydan mentioned that people who had money these days regretted not investing in ‘foreign currency’, and he stated the following:

“People thinking like this are right but let’s remember that there were times when the gold skyrocketed. There were also days we made money in the stock exchange. No one is able to foresee these increases. The saver who believed in the Director of its own national Central Bank, who believed in his national currency, had a reason to believe then. People in possession of money would like to protect themselves against inflation naturally. If not engaged in trade, they would want to invest in investment tools. Buy gold; buy stock certificates, bonds, or deposit in the bank. Real estate is always a good choice for bigger savings. ‘Not putting all the eggs in one basket’ is the primary principle. The rest is about prediction.”