Prominent economist Yeşilada says Turkey will face foreign exchange problem again in winter

Economist Atilla Yeşilada said that the dollar / TL would not rise above 28 due to foreign exchange inflows in the summer, but the problem would start again in the winter.

At its first meeting after the elections, the Central Bank increased its policy rate by 650 basis points from 8.5 percent to 15 percent. Exchange rates rose after the decision. With the regulations announced the next day, the pressures on the banking system were eased somewhat.

However, experts consider these steps insufficient.

Speaking to Ruhat Mengi a prominent journalist, Yeşilada said that increasing the interest rate to 15 percent in an environment where inflation is 40 percent would not change anything.

Yesilada said: “A very simple rule is that if you are going to fight inflation, the interest rate will be higher than inflation, it is also difficult to get there. Well, then how will we solve Turkey’s problems, because inflation is not the only problem we have, there is a balance of payments deficit that is, we do not have enough foreign currency. You are raising some interest rates, allowing the Turkish Lira to depreciate and trying to ensure that the economy balances on its own, whether it works or not. Rather, it will work in the summer, because I don’t think the dollar/ TL will rise above 28, there is a very strong inflow of tourist income in the summer, money doesn’t escape from the system anymore, so naturally, the Central Bank rises a little more without much intervention, the dollar finds its balance. Of course, the problem starts again in the winter months.”