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What is the driving force behind Turkish Economic problem?

  • The on going Trump attack on Turkish Economy

    Votes: 29 19.9%
  • Jewish Agenda to weaken adjacent countries to Israel

    Votes: 36 24.7%
  • Internal Turkish economic problems

    Votes: 50 34.2%
  • Falling Exports for Turkey

    Votes: 5 3.4%
  • Loss of Tourism income for Turkey

    Votes: 1 0.7%
  • External Loans or Debt impacting Economy

    Votes: 25 17.1%

  • Total voters
    146
I think Turkey should consider borrowing from the IMF otherwise its foreign debt will spiral out of control.

I guess at the international market, Turkey is currently borrowing at an interest rate of 7-8%. If it made a deal with the IMF, the rate would be about 3-4%, which is also close to Turkey's growth average in recent years, if not still higher.

But, of course, the idea of borrowing from the IMF would be politically bad for AKP as it has made huge negative propaganda against the institution. So, AKP, for its own future, may choose to go and continue to borrow from European bank at crazy rates as high as 8-9%.

China's development loans are usually given at a rate of 2-2.5% (for good partners).

Turkey may consider China again, too. At least China is not predatory.
 
I think Turkey should consider borrowing from the IMF otherwise its foreign debt will spiral out of control.

I guess at the international market, Turkey is currently borrowing at an interest rate of 7-8%. If it made a deal with the IMF, the rate would be about 3-4%, which is also close to Turkey's growth average in recent years, if not still higher.

But, of course, the idea of borrowing from the IMF would be politically bad for AKP as it has made huge negative propaganda against the institution. So, AKP, for its own future, may choose to go and continue to borrow from European bank at crazy rates as high as 8-9%.

China's development loans are usually given at a rate of 2-2.5% (for good partners).

Turkey may consider China again, too. At least China is not predatory.

Not to forget, economy is set to contact this year. Borrowing at market rate while GDP is contracting, seems to be a kind of double whammy. Chinese assistance in this scenario will be life saver. But to avail that, Erdogan will have to swallow his pride. Will he ?
 
63590276-2585-402F-9D91-DB9C352DDE37.jpeg
 
I think Turkey should consider borrowing from the IMF otherwise its foreign debt will spiral out of control.

I guess at the international market, Turkey is currently borrowing at an interest rate of 7-8%. If it made a deal with the IMF, the rate would be about 3-4%, which is also close to Turkey's growth average in recent years, if not still higher.

But, of course, the idea of borrowing from the IMF would be politically bad for AKP as it has made huge negative propaganda against the institution. So, AKP, for its own future, may choose to go and continue to borrow from European bank at crazy rates as high as 8-9%.

China's development loans are usually given at a rate of 2-2.5% (for good partners).

Turkey may consider China again, too. At least China is not predatory.

No need for Akp to borrow they will simply do a coup d etat to make the opposition quiet again. Erdogan is an Islamist in disguise.
 
Turkey’s central bank

The cost of
concision
IMG_20190506_210712.jpg





ISTANBUL
How a few missing words hurt
Turkey’s turnaround
A bank’s words have power
Three of them (“whatever it takes”)
calmed the euro area’s debt panic in 2012.
Another few (the Federal Reserve mulling a
“step down in our pace of purchases”) start-
ed the taper tantrum that upset emerging
markets in 2013.
What is left unsaid can also be power-
ful. After its interest-rate meeting on April
25th, Turkey’s central bank failed to repeat
eight words that had been included in each
of its seven previous statements: “if need-
ed, further monetary tightening will be de-
livered”. The omission cast doubt on its
commitment to fight inflation, which was
almost 20% in the year to March. In re-
sponse, the lira fell by more than 1% against
the dollar. It has fallen by 11% this year.
The mishap was an uncomfortable re-
minder of last summer’s currency turmoil,
when the central bank (browbeaten by Re-
cep Tayyip Erdogan, Turkey’s president)
failed to raise interest rates swiftly enough
to prevent a collapse in the currency. But
the parallels should not obscure what has
changed in the interim. Turkey’s economy
is better balanced now than it was then.
In September the central bank reassert-
ed itself, increasing interest rates to 24%,
where they have stayed since. The combi-
nation of tighter money and a cheaper cur-
rency curbed import spending and encour-
aged exports. As a result, Turkey’s
current-account deficit has narrowed far
more swiftly than even the government
had envisaged. Although its import bill is
hardly the only claim on its foreign earn-
ings (its banks and firms must also service
heavy external debts), the lira was relative-
ly stable from December to February.
Local elections in March were supposed
to bring a similar stability to politics, con-
cluding a maddening cycle in which Turks
marched to the polls seven times in five
years. Instead, the weeks before and since
have done the opposite, unsettling both
Turkey’s politics and the markets.
Mr Erdogan’s party, which lost in most
of the country’s big cities, has so far refused
to accept its narrow defeat in the Istanbul
mayoral contest. Citing alleged irregular-
ities, it has asked for a new vote. That
would trigger yet more political turmoil,
which could bring protesters onto the
streets and send foreign capital running
for the exit. Investors distinguish clearly
between countries that do and do not have
free and peaceful elections, says Ibrahim
Turhan, a former chair of the Istanbul stock
exchange. “No one would like to see Turkey
in the second group.”
In the month before the elections, Mr
Erdogan encouraged state banks to in-
crease the amount they lent at cheap rates.
Banks also came under pressure to lower
lira deposit rates, making other currencies
more attractive by comparison. Turkish
residents now hold over half of their de-
posits in dollars and other hard currencies.
None of this has helped the lira. On
March 21st the central bank revealed it had
burned through $6.3bn (over 18%) of its net
reserves in a fortnight, presumably in an
undeclared effort to prop up the lira. After
the news spooked investors, the govern-
ment squeezed the offshore lira market,
making it harder for foreign speculators to
borrow the currency in order to sell it.
But the squeeze also posed a problem
for Turkey’s banks, points out Brad Setser
of the Council on Foreign Relations, an
American think-tank, because they depend
on lira funding in the overseas market. To
ease their discomfort, the authorities made
it easier for banks to swap their dollars for
lira from the central bank. That had the ef-
fect of temporarily bolstering the central
bank’s dollar reserves, until the currencies
are swapped back again. As the financial
markets cottoned on to what was happen-
ing, investors began to distrust the central
bank’s weekly reserves figures.
Was it trying to mislead investors? Prob-
ably not. As required by imf standards, it
duly reported the swaps in its monthly re-
serves statement, which is published with
a 30-day lag. And in a press conference on
April 30th, it explained the source of its
sudden dollar infusion.
But although it clarified why its reserves
had abruptly gone up, it did not reveal why
they had suddenly gone down in the weeks
before. Judging by the financial markets’
reaction, the conference did little to bolster
investors’ faith in the lira. The words of
central banks can be powerful. But al-
though they choose what to say, markets
decide what to hear.
 
Some data of Turkish Currency/ USA dolar.


Turkey’s central bank

The cost of
concision
View attachment 558701




ISTANBUL
How a few missing words hurt
Turkey’s turnaround
A bank’s words have power
Three of them (“whatever it takes”)
calmed the euro area’s debt panic in 2012.
Another few (the Federal Reserve mulling a
“step down in our pace of purchases”) start-
ed the taper tantrum that upset emerging
markets in 2013.
What is left unsaid can also be power-
ful. After its interest-rate meeting on April
25th, Turkey’s central bank failed to repeat
eight words that had been included in each
of its seven previous statements: “if need-
ed, further monetary tightening will be de-
livered”. The omission cast doubt on its
commitment to fight inflation, which was
almost 20% in the year to March. In re-
sponse, the lira fell by more than 1% against
the dollar. It has fallen by 11% this year.
The mishap was an uncomfortable re-
minder of last summer’s currency turmoil,
when the central bank (browbeaten by Re-
cep Tayyip Erdogan, Turkey’s president)
failed to raise interest rates swiftly enough
to prevent a collapse in the currency. But
the parallels should not obscure what has
changed in the interim. Turkey’s economy
is better balanced now than it was then.
In September the central bank reassert-
ed itself, increasing interest rates to 24%,
where they have stayed since. The combi-
nation of tighter money and a cheaper cur-
rency curbed import spending and encour-
aged exports. As a result, Turkey’s
current-account deficit has narrowed far
more swiftly than even the government
had envisaged. Although its import bill is
hardly the only claim on its foreign earn-
ings (its banks and firms must also service
heavy external debts), the lira was relative-
ly stable from December to February.
Local elections in March were supposed
to bring a similar stability to politics, con-
cluding a maddening cycle in which Turks
marched to the polls seven times in five
years. Instead, the weeks before and since
have done the opposite, unsettling both
Turkey’s politics and the markets.
Mr Erdogan’s party, which lost in most
of the country’s big cities, has so far refused
to accept its narrow defeat in the Istanbul
mayoral contest. Citing alleged irregular-
ities, it has asked for a new vote. That
would trigger yet more political turmoil,
which could bring protesters onto the
streets and send foreign capital running
for the exit. Investors distinguish clearly
between countries that do and do not have
free and peaceful elections, says Ibrahim
Turhan, a former chair of the Istanbul stock
exchange. “No one would like to see Turkey
in the second group.”
In the month before the elections, Mr
Erdogan encouraged state banks to in-
crease the amount they lent at cheap rates.
Banks also came under pressure to lower
lira deposit rates, making other currencies
more attractive by comparison. Turkish
residents now hold over half of their de-
posits in dollars and other hard currencies.
None of this has helped the lira. On
March 21st the central bank revealed it had
burned through $6.3bn (over 18%) of its net
reserves in a fortnight, presumably in an
undeclared effort to prop up the lira. After
the news spooked investors, the govern-
ment squeezed the offshore lira market,
making it harder for foreign speculators to
borrow the currency in order to sell it.
But the squeeze also posed a problem
for Turkey’s banks, points out Brad Setser
of the Council on Foreign Relations, an
American think-tank, because they depend
on lira funding in the overseas market. To
ease their discomfort, the authorities made
it easier for banks to swap their dollars for
lira from the central bank. That had the ef-
fect of temporarily bolstering the central
bank’s dollar reserves, until the currencies
are swapped back again. As the financial
markets cottoned on to what was happen-
ing, investors began to distrust the central
bank’s weekly reserves figures.
Was it trying to mislead investors? Prob-
ably not. As required by imf standards, it
duly reported the swaps in its monthly re-
serves statement, which is published with
a 30-day lag. And in a press conference on
April 30th, it explained the source of its
sudden dollar infusion.
But although it clarified why its reserves
had abruptly gone up, it did not reveal why
they had suddenly gone down in the weeks
before. Judging by the financial markets’
reaction, the conference did little to bolster
investors’ faith in the lira. The words of
central banks can be powerful. But al-
though they choose what to say, markets
decide what to hear.

Many people took it humorously; but unfortunately, they really did it:

 
A video about the Turk economy.

Some collective correlation between S-400 missile and IMF (Int. Monetary Fund) in the Turk Economy.

 
Last edited:

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