Turkish Central Bank grows a pair...

[JohnF]

No change to interest rates after meeting today despite pressure from government.  Stopped the gradual slide we've seen over past few weeks since the elections, but not sure for how long...

Bad news is that inflation is up and way above targets set by TCB. 

Coverage in Hurriyet & TD

JF

[Colwyn]

Is there now a shortage of feathers in Turkey due the amount of them a certain person will have been spitting?

[JohnF]

Aye, sounds like he is a seriously unhappy wee chappy. 

Next weeks proposed May Day celebrations in Taksim are likely to pi$$ him off even more.  I just hope we don't see bloodshed on the same scale as 1977.

JF

[thebillet]

For what it's worth, Goldman Sachs predict a further weakening of the lira over the next 12 months. Might be true might not. I for one am back in sterling and a lot more relaxed as a consequence.

[Bodyshine]

Confused  I see people on here saying that they are glad they have changed there money back to English but if you have your money in lira and have no reason to go back to uk that's fine isn't it

[apollo]

Confused  I see people on here saying that they are glad they have changed there money back to English but if you have your money in lira and have no reason to go back to uk that's fine isn't it

Seems logical to us. In addition, we have friends who transfer some of their Sterling from UK and change into Lira for home improvements etc. That also seems to make sense to us.

[Colwyn]

If you are in a position to hold currency in either sterling or lira then you have an interesting choice. Holding lira will mean you can access higher interests rates - say 10%. But you are also at risk of currency depreciation and if you held lira for the last 12 months it would have lost 25% of its value.


As an example, on May 7th 2013 you could have changed £10,000 into 28,000TL. If you held onto sterling last year you could change the same amount today into 35,500TL. Of course either way you would have to deal with Turkey's accelerating inflation rate but would you prefer to do that with 28k or over 35k? This choice doesn't go away simply because you never intend to leave Turkey. Thus, all you need is an excellent crystal ball that is able to tell you whether the TL is going to move up, down, or stay the same over the next 12 months.

[apollo]

If you are in a position to hold currency in either sterling or lira then you have an interesting choice. Holding lira will mean you can access higher interests rates - say 10%. But you are also at risk of currency depreciation and if you held lira for the last 12 months it would have lost 25% of its value.


As an example, on May 7th 2013 you could have changed £10,000 into 28,000TL. If you held onto sterling last year you could change the same amount today into 35,500TL. Of course either way you would have to deal with Turkey's accelerating inflation rate but would you prefer to do that with 28k or over 35k? This choice doesn't go away simply because you never intend to leave Turkey. Tus, all you need is an excellent crystal ball that is able to tell you whether the TL is going to move up, down, or stay the same over the next 12 months.

If you have a life in Turkey and do not intend to return to The UK, apart from holidays and visiting, or change your Lira back into Sterling, then the value of you Lira has not depreciated. Ok, one has suffered from Inflation but that is a fact of life.

[Colwyn]

If you have a life in Turkey and do not intend to return to The UK ...  then the value of you Lira has not depreciated.

I disagree. 35 is always more than 28 wherever you are. But I don't propose to dispute this at tedious length (I've probably already done that on other "finance" threads).

[JohnF]

If you have a life in Turkey and do not intend to return to The UK, apart from holidays and visiting, or change your Lira back into Sterling, then the value of you Lira has not depreciated.

I disagree also - the value of the lira has depreciated irrespective of where you live.  Using your own point, holidays (anywhere) and visiting the UK are now more expensive and almost all economic forecasts suggest that inflation will continue to rise making many day to day essentials more expensive due to increased costs of imported materials and transportation.

Ever thought why its always been so easy to open up foreign currency accounts in Turkey?  Turks don't keep their serious wedge in lira, never have done.  Before the uptake in foreign currency accounts, gold was the preferred choice of the masses.

JF