Just hit 3.30

[LeeGlo]

Yep current exchange rate is just great for holiday makers, and anyone who can draw on sterling for everyday living. But if you are in the unfortunate position of wanting to take money out of Turkey, say after a property sale, it is definitely not a good time to be changing it to sterling.

On the bank interest rate, I would be quite happy to see a consistent 10%.

[Ian]

Some positive news for a change - let's hope they are right:

http://mobile.bloomberg.com/news/2014-01-03/lira-oversold-as-turkish-graft-probe-spurs-drop-market-reversal.html

[Colwyn]

Yesterday's comments:
Bloomberg News said that the recent tax hikes have lowered the likelihood that CBank will raise interest rates.
Wall Street Journal said that the recent tax hikes have increased the pressures on the CBank to raise interest rates.


I like to be kept informed by authoritative expert opinion.

[usedbustickets]

And it is for this reason Colwyn that I retain you as my Broker.  

[Colwyn]

Wall Street Journal also quotes another piece of expert opinion. "Nihat Zeybekci, said Thursday that the central bank shouldn't feel compelled to undertake a currency defense and that price increases driven by new taxes won't impact inflation." Hmm? Price rises won't impact inflation? That's a somewhat unorthodox analysis. Who is this Nihat Zekbekci fellow? Oh - he's AKPs new Minister for Economic Affairs. DON'T PANIC! DON'T PANIC! as a namesake of mine used to shout (see Sitcom thread).

[usedbustickets]

Wall Street Journal also quotes another piece of expert opinion. "Nihat Zeybekci, said Thursday that the central bank shouldn't feel compelled to undertake a currency defense.

Is this this aligned with the Central Bank's we've got 6 billion in foreign reserves to use in defence of the lira?  I think this is a warning that

a) this piddling sum will soon run out under pressure from the speculators
b) they (the AKP government) can't defend the TL
c) they (the AKP government) won't defend the TL anyway
d) the TL has further to fall as a result of of a) b) and C), and that's without taking into account the linked issues of the current account deficit and tapering of dollar printing by the USA.

BTW is current account deficit the same as a balance of payment (crisis) we used to hear about in the 60s and 70s?

[JohnF]

UBT - like it    and pretty accurate.

Maybe we'll end up back in the days when my OH would have needed a wheelbarrow to collect her wages if she hadn't been on a dollar contract and folks used to write prices on a chalkboard - loaf of bread could easily double in price in the time it took you to count out the several million required for its purchase.

At our office the new winter coats and boots bought recently are being called Erdoğans Gift, due to most folks being on euro contracts. 

JF

[Colwyn]

BTW is current account deficit the same as a balance of payment (crisis) we used to hear about in the 60s and 70s?

The balance of payments is composed of two elements. One is the current account which is about income and the country's trading balance. A deficit here can be made up for via the second element, the capital account - i.e. you can balance your national books by selling off your assets or by borrowing from abroad. Turkey has done remarkably well in recent years by paying off its Government debt to the IMF (it cleared the books earlier this year). However, the private corporate sector is heavily reliant on international borrowing - I believe that 40% of business investment is funded from abroad. This is what is becoming increasingly difficult to repay and why some senior business figures are now turning against the Erdogan/Basci policy towards supporting - or rather failing to support - the Lira.


P.S. Mehmet Simsek, Finance Minister, has recently announced "We are not going to fight the markets, we are going to let the adjustment run its course" so - if Basci obeys Simsek's policy - it seems that more Central Bank intervention, particularly I guess the raising of interest rates, is unlikely and the Lira will continue to slide. If you were a neo-classical economist (and I am neither economist or neo-classicalist) you would suppose the Lira will now to free to find its "natural" exchange rate.
http://www.ft.com/cms/s/0/0bbab266-76b6-11e3-807e-00144feabdc0.html

[Colwyn]

It has been a good couple of days for the Lira. Held its own yesterday and clawed some back today. But my Visa webpage tells me that if you had drawn ATM money with good plastic yesterday you would have got 3.57 TL to the £. So you expats with sterling accounts ought to be happy.

[Colwyn]

Quiet day on the exchanges today - the Lira only lost about half a percent against $, € and £ (£ = 2.68+). Perhaps because it is public holiday in USA or perhaps waiting for the meeting tomorrow.