Global developments push lira to record low against dollar at 2.7240
by Daily Sabah
ISTANBULApr 15, 2015 - 12:00 am GMT+3
by Daily Sabah
Apr 15, 2015 12:00 am
With the reflection of global developments, the Turkish lira loses value against the dollar and should not cause concern according to Economy Minister Zeybekci, while the President’s chief consultant finds the volatality speculative
The dollar set a new record against the Turkish Lira on Wednesday - trading at TL 2.7240 to the dollar - continuing its rising trend that began in early April, and bringing its depreciation this year to 14 percent.
The dollar enjoyed its best year in a decade in 2014 by gaining value against the major currencies of the world and 169 countries' currencies in total, which has also caused volatility in the Turkish Lira. In turn, it seems like it will continue to follow the same trend in 2015.
Economy Minister Nihat Zeybekci said yesterday that the lira's slide to record lows was not a cause for concern and reflected global developments, arguing against forex intervention and saying the currency will find its own balance.
The recent major economic figures have not been supportive of Turkey either. The country succeeded in reaching a 2.9 percent growth rate in 2014. However, targets and expectations were higher than International Monetary Fund (IMF) forecasts of 3 percent. According to the Turkish Statistical Institute, the foreign trade deficit decreased by 10.2 percent in February - from $5.186 billion to $4.656 billion - while the foreign trade volume narrowed as well. Additionally, exports and imports had decreased by 6 percent and 7.2 percent, respectively, compared to the previous year. Yet, Economy Minister Nihat Zeybekci said the growth rate will not satisfy expectations. In 2014, Turkey sent more than 40 percent of its exports to the EU, receiving payment in euros, while more than 60 percent of its imports were paid for in dollars. This also has a significant impact on the profit earned by Turkish exporters. Moreover, the IMF announced on Tuesday that it cut Turkey's growth forecast from 3.4 percent to 3.1 percent for 2015, while upgrading its growth forecast for 2016 from 3.4 percent to 3.6 percent.
Former CEO and General Manager of Borsa Istanbul, İbrahim Turhan, said that any kind of comment on the increase in foreign exchange rates that assumes this increase is only specific to Turkey and that it might cause damage to the economy are baseless. "If such comments are not ill-intentioned, then it means they lack any kind of logical analysis and come from misinformed people," Turan chided. He added that anyone who tries to create confusion and panic because of the decline in the reserves of the Central Bank of the Republic of Turkey (CBRT) are either ignoring the increase in foreign exchange deposits of both local firms and households, or want to hide it. "In either case, this is worrying for the economy," Turhan said.
Turhan - a deputy candidate from the ruling Justice and Development Party (AK Party) from İzmir who resigned from his former duty - further commented on the agenda of the Monetary Policy Board (PPK) meeting of the CBRT, which will take place on April 22, and the fluctuation observed in the foreign exchange rates. Stressing that the CBRT should always be proactive and be one step ahead of the developments in the market, Turhan said that the meeting was a good step in this respect. He also said the CBRT has various tools at its disposal, and that these tools, along with various steps, can be used to increase the capabilities of the Central Bank - especially in terms of risk management and predictability in the markets, including derivatives markets.
Meanwhile, the Chief Consultant of President Recep Tayyip Erdoğan, Yiğit Bulut, commented on the increase in dollar exchange rates through his Twitter account. Bulut said those who speculate about the dollar exchange rates with the belief that no step can be taken, are not considering how each required step can be taken. He also noted that as long as the euro-dollar parity is above one, any price above the 2.55-2.63 range, at which the last increase began, is against the realities of the market and are speculative. The euro lost 0.16 percent of its value against the dollar yesterday, maintaining parity at 1.0640.