Fluctuating and rising foreign exchange (FX) rates pave the way for the business world to have difficulties in preparing the 2022 budget although the year ends soon, according to Orhan Turan, President of Turkish Enterprise and Business Confederation (TURKONFED). Speaking in a televised interview with Bloomberg HT, Turan said these difficulties will continue as the country hunkers down the interest rate-FX rate-inflation spiral.
“Raw material price hike and supply problems are also on the carpet,” the TURKONFED President added.
However, FX rates sharply dropped following the statement about the new economic regulation by President Recep Erdogan after the Cabinet meeting. President Erdogan said there will be a new instrument to help people who might invest in FX get the same results while sticking to TRY. “Investors will be encouraged to move towards TRY-based assets by the issuance of government bills that are indexed to public economic enterprise revenues that are transferred to the budget,” he noted.
Erdogan also said that mattress savings of people who withdraw their assets from Turkish banks and keep at home would come back into the economy. “There are five tons of gold with a total worth of USD 280bn under the mattress. New instruments will be developed with market participants to incorporate this into the economy,” he added.
USD/TRY, which hit an all-time high of 18.36, rapidly decreased by 23% to 12.60 yesterday after President Recep Tayyip Erdogan announced the new economic regulation. USD/TRY is traded at 13.31 this morning.
All public and private banks can be included in President Erdogan’s new system, according to Alparslan Cakar, Chairman of the Turkish Banks Association (TBB) and General Manager of Ziraat Bank. He said USD 1bn was changed at banks following Erdogan’s economic measure package.
DAILY AGENDA
The Consumer Confidence Index decreased by 3.1% from 71.1 to 68.9 in December, compared to the previous month, according to the Turkish Statistical Institute (TurkStat).
Agricultural input price index (Agriculture-IPI) rose by 29.58% in October, compared to the same month of the previous year, according to TurkStat. The index increased by 4.17% on a monthly basis.
READ SELECTED ARTICLE FROM OUR MAGAZINE
>> Lowest terms of trade since the 1994 currency crisis
The terms of trade (TOT) decreased by nearly 19% from 98 to 79 in October on an annual basis. Considering the data from the last 30 years, the last time Turkey saw such low levels of TOT was during the 1994 currency crisis.
