Lira getting Stronger - Why?

[Colwyn]

a) Erdogan has returned from his South American "charm tour" where his security agents behaved as they would in Turkey and beat the XXXX living daylights out of protesters - that upset one or two of the more finicky locals. And today he has announced that he wants to see the rise of Islamic Banking in Turkey to cover 25% of the banking market.
(b) Today the lira lost value of up to 2% against the dollar, and even 1.25% against the pound.

I wonder if there is any connection between a) and b)?

[P.S. I think I can do a basic job of explaining Islamic Banking - that doesn't have unholy interest {i.e. "usury"} - in a few sentences, if anyone is interested.]

http://uk.reuters.com/article/turkey-erdogan-banking-idUKI7N16204Y

[mercury]

a) Erdogan has returned from his South American "charm tour" where his security agents behaved as they would in Turkey and beat the XXXX living daylights out of protesters - that upset one or two of the more finicky locals.           Hilarious laughed out loud at this comment
 

[JohnF]

With the exception of Bank Asya, I believe most of the other major "Islamic" lenders in Turkey are part owned by Middle Eastern countries.

Truth be told, the practice of Sukuk (Islamic lending) is just a pretty convoluted way round charging interest.  In simple terms - Wullie wants to buy a house, so a middleman buys it (Wullie moves in) and sells shares in it to "investors" who then receive "rental" at an appropriate level in relation to the value of the house from Wullie.  Once enough "rental" has been paid, Wullie buys the house from the shareholders at an agreed (usually nominal amount) price.

Turkey is getting heavily into Sukuk - one law firm in Istanbul is doing a lot of business involving this sector.  Big bucks involved.

JF

[mercury]

He has been spouting today about The interest rates again... He wants them down to the USA and European interest rates.. This will put an end to a lot of peoples dreams of living in Turkey.. There are still people there relying on their 10%...
Ooops. That should have read that Erdogan was today giving an impassioned speech on interest rates.

[Colwyn]

Truth be told, the practice of Sukuk (Islamic lending) is just a pretty convoluted way round charging interest.

Quite so. It is one thing to do this for a single transaction. It is quite another to guarantee a 10.2% profit (not interest) per month on your Turkish bank account in advance of your deposit. But is is easily achieved by the miracle of creative accounting.

[nichola]

Bit more detail here following up on the Reuters link Colwyn poster above

http://www.hurriyetdailynews.com/Default.aspx?pageID=517&nID=95761&NewsCatID=344

[Colwyn]

Thanks Mercury and Nicola. Your input makes it clear that RTE is off on his mission against "the interest lobby" again. What are chances that TRY will be at record low against dollar tonight or Monday morning?

[JohnF]

I think the wee man needs a basic accounting or economics course.  Maybe a copy of Economics for Dummies Dictators should have been wrapped up for him to open this morning  

He says: "As we have always mentioned, interest rates are 0.5 percent in the U.S., negative in Japan, and at 0.25, 0.5, 1 or 2 percent in Europe. What about us? We are around double digits."

Well hello... how many of the countries mentioned has double digit inflation?

Really, the mans a fool.

JF

[kevin3]

  Plus, how many of those countries are budding dictatorship's .??  Apparently Gulen is to blame for the Tourism crisis.

[Colwyn]

Prices from end November 2009 - just over six years ago. I wonder what they are now.