Author Topic: Lira getting Stronger - Why?  (Read 291501 times)

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Offline Karennina

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Re: Lira getting Stronger - Why?
« Reply #1060 on: May 23, 2018, 11:25:25 AM »
This is all making me rather edgy, I appreciate tourists are happy to be getting more tl for their £...we do still have assets in Turkey invested years ago, have never had the need to change back to gbp, if the “wee fella” ( I love that name for him!) does decide with his well known stubborness to ride things out and take no action, if we have no need to change back will our “assets” be ok? Weve tried to get to grips with understanding the effects of it all but we just dont get it! What part exactly does the up and coming election play in the tl being on the up?   :)



Offline Colwyn

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Re: Lira getting Stronger - Why?
« Reply #1061 on: May 23, 2018, 12:18:47 PM »

Apparently there was another meeting of the brains trust of Turkey's Economic Management Team on Monday. Seems to have worked as well as last week's meeting. The $ topped out at 4.929 this morning before it fell back to 4.84 - presumably due to Central Bank buying back lira with dollars.
What part exactly does the up and coming election play in the tl being on the up?      :)
In the election run up Erdogan has made it inescapably clear what he intends to do when he gets his hands on supreme power. He intends to lower interest rates. International investors do not share his view that this will lower inflation. Instead they see inflation sky-rocketing and the currency being reduced to near rubbish. Obviously they don't want to hold lira so they are selling it off and nobody wants to buy it except the Turkish Central Bank. Thus the value of the lira drops even more.

Over the short term what makes things worse for the lira is that Erdogan has gone and told everyone that he is not going to accept the use of what nearly all conventional economists think is the strongest CB weapon - i.e. raising CB interest rates to cool things down. So everyone in the market now knows the lira will not be effectively defended. Great day for speculators: they know which way the lira go (down); they can't lose - unless CB boss Cetinkaya goes against Erdogan and risks going to prison as a "terrorist".


« Last Edit: May 23, 2018, 12:32:25 PM by Colwyn »

Offline Karennina

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Re: Lira getting Stronger - Why?
« Reply #1062 on: May 23, 2018, 12:38:06 PM »
Thank you very much Colwyn for your post very interesting, I kind of get some of it now I think! I knew RE wants lower interest rates and I also knew if he was to raise the rate it would help the falling tl...I guess it will end up being his way or the high way and b@@@@r the business’s etc this is having an impact on!
I guess for now Im pretty much screwed!

Offline Colwyn

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Re: Lira getting Stronger - Why?
« Reply #1063 on: May 23, 2018, 12:44:45 PM »
It depends what your assets are, I guess. Having loads of cash in lira deposit accounts wouldn't be good.

Offline JohnF

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Re: Lira getting Stronger - Why?
« Reply #1064 on: May 23, 2018, 13:37:52 PM »
Like Colwyn said, the folks who are in a precarious position are those with large amounts of lira in the bank or other lira investments, who, at some time in the immediate future may want to convert some of that lira into sterling (or euro or whatever).  If you're in Turkey for the duration, then all you have to contend with is inflation eroding your capital.

I've seen (on other forums) folks saying that they don't care about the exchange rate as they're still getting 10%+ interest.  All good until you realise that inflation is in double digits which kinda wipes out those gains, after the tax man has had his slice.  My OH was working in Istanbul during the crazy times where a loaf of bread could change price between you picking it and paying for it, lets hope it doesn't get to that stage.

Short to medium term I don't think folks who own property have much to worry about (purely my opinion) from an economic perspective, unless they want to sell up.  The problem then is that their perceived (sterling) value of their property is unlikely to be met.  Of course there'll always be exceptions, but when the economy is in turmoil property prices tend to fall.

While I would urge caution to anyone considering purchasing a property in Turkey right now, if we hadn't sold Karagozler last year I wouldn't be overly concerned - that said, I'm still pleased that we did. 

JF
 

Offline Colwyn

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Re: Lira getting Stronger - Why?
« Reply #1065 on: May 23, 2018, 14:27:56 PM »
Market analysts are calling for a Şimşek strike. [Sorry, couldn't resist the obvious pun].

Tim Ash, an emerging markets strategist at Bluebay Asset management and long-time Turkey watcher, called on Wednesday for the country’s top economic officials to threaten resignation in order to avert a crisis. Deputy prime minister Mehmet Simsek, finance minister Naci Agbal and central bank governor Murat Cetinkaya needed to “put their jobs on the line for the good of the country” and “tell Erdogan that he is wrong on rates,” he wrote on Twitter. “There is still time to stabilise things but [interest rates] need to be hiked.” (Financial Times, 23/05/2018).

Offline Colwyn

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Re: Lira getting Stronger - Why?
« Reply #1066 on: May 23, 2018, 17:24:39 PM »
Turkey Central Bank says it has held an emergency meeting on interest rates. Lira mounts recovery on this news. $ and £ now over 2% down on day's trading. But markets still very volatile. I can't find any statement on the outcome of the meeting. Up 0.25% on interest rates isn't going to impress anyone; up 2% might just about do it. More importantly it shows CB willing to defy the President.


Wow! Announcement just made. Interest rate up 3% ! Erdogan will be boiling; good idea for aides to keep out of his way for a while.
« Last Edit: May 23, 2018, 17:35:51 PM by Colwyn »

Offline Scunner

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Re: Lira getting Stronger - Why?
« Reply #1067 on: May 23, 2018, 17:37:13 PM »
Rate just took an immediate plummet!

Offline Karennina

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Re: Lira getting Stronger - Why?
« Reply #1068 on: May 23, 2018, 17:38:00 PM »
Its tl account! Both you guys posts are interesting and informative, I have no plans to convert it to any other currency so from what I read its not all bad though Im wondering whether to go on a massive shopping spree next month!
Wow good to hear about the chaps who have stood up to T.W.F   :)( i soo love that name!)

Offline Karennina

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Re: Lira getting Stronger - Why?
« Reply #1069 on: May 23, 2018, 17:39:59 PM »
Wow it has hasnt it Keith Iv checked it around 6 times today, so that little hike in the interest rate has defo done something   ;)




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