Lira getting Stronger - Why?

[Toky]

Does anyone know the exchange rate of the US $ to Lira?

[JohnF]

xe.com

JF

[JohnF]

Next up: the pound hits 6?

Well the £ just hit 5.75

Well, one day later and it's broken 5.81.  Freefall is the term that comes to mind, against sterling certainly.  Oh wait, 4.10 against the dollar and 5.06 to the euro.

JF

[Colwyn]

Wow! Today down 1.7% against the £, slightly more against € and 1.4% against $. Erdogan is going to get his wish for a "competitive" lira at a run.

[JohnF]

Now 5.85 and still dropping.

JF

[kevin3]

          The wee fella has asked AKP officials not to discuss the state of the economy.          How strange.     

[davybill]

He will let,yourself and Colwyn do it Ha Ha!

[kevin3]

           5.87         

[philrose]

5.92 and still falling....

[Colwyn]

JohnF keeps reminding us of how the exchange rate affects business by making it more expensive to pay back on foreign loans and investment. Two articles in today's Hurriyet give examples of the importance of this. One reports that two huge Turkish companies want to restructure their debt: the media giant, Dogan Holdings, and the biggest sweet company, Ulker, that both have around $6 billion debt they are finding hard to repay. So I had to find out a bit more about "corporate debt restructuring". Apparently it is a milder alternative to bankruptcy - so it is big stuff. It involves trying to get your debt holders to agree to lowering your debt and/or letting you repay it over a longer period. To persuade them to do this you could swap debt for shares or warn your lenders that you might go broke and not be able to pay anything if they don't help you out of the hole.

How did giant Turkish companies get into this mess with 7% growth last year? Dogan gives a good example. If the interest rate it pays rises by 1% it has to pay 6 million lira; if the $ exchange rate rises by 1% it costs 116 million lira. Since 2012 the $ exchange rate has risen by 113%. Ouch!

With escalating hostilities between Erdogan and Deputy PM Simsek over the issue of interest rates cracks may be appearing in the AKP Government. It may be the best hope of getting rid of Tayyip in 2019 (or sooner) - even though that is currently not a realistic prospect.

http://www.hurriyetdailynews.com/opinion/ahu-ozyurt/fasten-your-seatbelts-storm-is-approaching-130095

http://www.hurriyetdailynews.com/opinion/ugur-gurses/fallout-from-turkeys-currency-depreciation-credit-restructuring-130092