Economy in Turkey: Dollar TL rate exceeds 20 limit before election, despite government’s efforts

The government’s plan of entering the election by suppressing the dollar under 20 TL has failed. The dollar settled above 20 TL. Economists have remind that billions of dollars were burned for the exchange rate level and said, “We will pay the price.”

The last trading day before the second round of the election in financial markets was volatile. Borsa Istanbul recovered like before the first round and exceeded the 4 thousand 500 level, while dollar / TL exceeded its historical level and settled above 20 lira despite all the pressure practiced by the government.

In the Grand Bazaar and interbank market, transactions have been seen with dollar TL rate above 21 lira for a long time, especially in the direction of sales. Experts, on the other hand, reminded that the Central Bank sold billions of dollars of foreign currency to prevent the formation of a perception of “Dollar is 20 TL” before the election and drew attention to the dangers awaiting Turkey.

“TL INTEREST RATES WILL INCREASE”

“The dollar has been sold at 21 lira on the free market for a long time. No one can buy dollars at 20 liras” said Dr. Murat Kubilay stating that the dollar exchange rate in Turkey has increased due to the high current account deficit rather than foreign exchange demand. He continued as follows: “For this reason, it is also impossible to keep the level of 21 liras. Next week, if there are no capital restrictions, we will see a rapid increase in the exchange rate.”

He also stated that restrictions such as access to installment cash advances would definitely happen after the election, adding although Turkey would not feel it much by the end of Summer, it would pay the price of these policies painfully, in the fall. The Professor said that the money stored from the Gulf and Russian aid were also useless.

Another economist stated that the only way that couf be followed to keep the dollar in case President Erdogan won was to increase TL deposit rates even more. He continued as follows: “They learned by wasting billions of dollars that the dollar would not be kept by suppressing it. I think they will give up the low interest rate rhetoric implicitly by releasing TL deposit rates now.”