2023 has come to an end, inflation has been announced, the net return on financial investment instruments has been calculated, and we immediately thought of the opinion expressed by Turkish Central Bank (CBRT) Governor Gaye Erkan in an interview that made a lot of noise a while ago.
What did Gaye Erkan say in response to the fact that about 5 percent of the outflows from the KKM went into foreign currency:
“It is mathematically absurd to switch to foreign currency despite such an interest rate!”
From a short-term perspective, this approach could hardly be called wrong. But what if you look at a period of eight to ten years, twenty years?
As the phrase goes, just like the wolf spends the winter but does not forget the frost, the citizen does not forget the “beating he received for holding on to the TRY” for years.
We are not saying this. Of course, no one says this directly, no one says “If you stay in TRY, you will lose money”. But the rates are obvious…
The data says this:
In these two decades, those who kept their money in TRY deposits lost 30 liras of their 100 liras against the increase in CPI.
Those who invested in domestic debt securities lost more than half, 52 liras. Note that the calculation for domestic debt securities is nineteen years old, as the data started to be kept in 2005.
This is the picture! If you invest your money in TL deposits and domestic debt securities, you lose.
This is experience.
Otherwise, from a short-term perspective, of course, current interest rates are and will be providing higher returns than foreign exchange. But citizens cannot get rid of this concern:
“Today the interest rate seems fine, but what if tomorrow some strange steps are taken, or the interest rate is lowered again, or something else happens and the exchange rate skyrockets?”
Highest gain in gold
Every year, we launch an initiative to bring the gold under the pillow, in other words, the bracelets and necklaces of our women into the economy, and we intend to take steps in this direction. Let me say this, it won’t work.
Here is the result of twenty years… Between 2004 and 2023, the highest real gain was realized in gold. The real rate for twenty years is exactly 473 percent. TRY 100 at the end of 2003 increased to TRY 573 at the end of last December when invested in gold.
Stock market in second place
TurkStat calculated the twenty-year net return on equities as 155 percent.
There will be many objections to this rate. This is because stock-based calculations are mostly made in the stock market, and some stocks have increases of hundreds of times. However, what TurkStat does is to take an average over the stock market index. And this is the average found; 155 percent increase in real terms in twenty years.
In these twenty years, the real return on the dollar has been 18 percent. The euro, on the other hand, is at the same level it started at; there is no real gain or loss.