Expecting that additional interest rates will increase after the removal of the three main policy makers, the fear now is that families and companies will return to the dollar and many euros.
The Turkish Lira is no longer interested in local businesses and this is also a threat to the decline that has attracted the currency in a series of currencies last month.
Citizens bought $ 1.7 billion in foreign currency last week on October 8, according to a recent report from the central bank, showing a three-week sale – the largest in half a year – that helped clear the way.
In anticipation of a further interest rate increase after three policymakers were fired Wednesday night, fears now that families and companies have returned to become more dollars and euros. The lira fell nearly 1.1% to a new 9.1883 dollar low on Thursday.
Buying foreign currency from local investors could “create problems for the Turkish lira,” said Onur Ilgen, chief financial officer at MUFG Bank Turkey in Istanbul, noting that the recent sale was boosted and made a profit.
Citizens have a net worth of $ 234 billion, about half the total income. When they do the nibble trade – buying dollars when the lira is strong and selling when it weakens – after a long time they have more money.
It is a wall against rising prices that has disrupted the economy and cost them dearly. The Turkish currency follows a ninth year low, losing more than 80% of its value since the end of 2012, most in developing countries after the Argentine peso.
“If the locals are very worried about the low interest rate on the lira, there is a chance that the Turkish people will convert more deposits from liras into dollars,” said Nick Stadtmiller, director of EM at Medley Global Advisors in New York.
Last month, the central bank cut interest rates unexpectedly by 18%, even though inflation was only 20%. Proponents of her case have been working to make the actual transcript of this statement available online.
It is thought that the president is now planning another approach after firing three members of the central bank’s interest-raising committee on midnight legislation.
Which side of the brokers have decided to take the next few days and weeks is also important because foreign investors have already left the market. He now owes less than 5% of local government debt, down about 30% in 2013.
“I think the risk of the lira is the easiest way to finance and through the domestic flow – not the outflow,” Stadtmiller said.
One of the drawbacks to the lira is that the amount of debt is declining, which should help reduce the existing account, reducing the need for foreign currency in Turkey, according to Evren Kirikoglu, an independent expert in Istanbul.
More information on Monday showed that the economy has recorded its first monthly earnings since October 2020.
But even so, because of the violation of the $ 9-a-week mindset this week, local businesses are able to “stop or even change” their foreign exchange purchases, Kirikoglu said.