What did economists say about new exchange measures introduced by BDDK?  

The BRSA’s imposition of currency restrictions on companies for TL commercial loans has shaken up the market and exchange rates. Is it the end of an era in foreign exchange? There have been remarkable comments from economists about the decision.

THE DOLLAR FELL HARD

Exchange rates declined because the decision would force some companies wanting to use TL commercial loans, to sell foreign currency or not buy new foreign currency. It is also thought that the implicit intervention of the Central Bank and public banks may also contribute to the decline in exchange rates.

The dollar/TL, which was at the levels of 17.35 before the decision, rose above 16.90 this morning after falling to 16.50 after the decision. Again, the Euro/TL, which was at 18.30 levels before the decision, also rose above 17.80 this morning after seeing 17.40 levels after the decision.

“GOODBYE DECREE NO. 32”

Economist Mahfi Eğilmez shared the message “Goodbye Decision No. 32” on his Twitter account after the decision.

Resolution No. 32 regarding the protection of value of Turkish lira was issued in 1989, freeing capital movements, lifting ban and restrictions on foreign currency transactions and making TL a convertible currency.

IF TRADING STOPS…

A chief economist of the Turkish Industrialists and Businessmen’s Association (TUSIAD), shared following message on her personal Twitter account: “Instead of implementing the right economic policies, we are trying to maintain the economy with successive regulations. None of these latest applications are sustainable nor will they contribute to the economy in the medium term. What good will it do and to whom, if trading stops at the end of the day?”

Kerim Rota, Head of Economic Policy of the Future Party, also shared a message about the decision, saying: “The authority has come to a point where they cannot tolerate companies to keep even $ 1 million in savings accounts. Expectations that will now deteriorate due to waiting for the next step will be much more toxic than short-term gains. The so-called new economic model has turned into the 1970s.”

THE ANALOGY OF ARGENTINA

Another economist has said, “When this new measure is implemented, it means the system will have switched to partial capital controls which I referred to as semi-Argentina. Of course the result will probably be a shrinking economy and they’ll live to see it.”

An economist from HSBC said “15 million TL currency seems to be a limit that can affect even medium-sized SMEs. As it would be almost impossible for companies to operate without using loans, they will have to sell a significant amount of foreign exchange, or else may have to switch to protected deposit system.”

Another economist listed the following possible scenarios regarding the possible effects of the decision:

*Companies may turn to futures transactions for exchange rate risk (off-balance sheet).
*A decrease in the foreign exchange presence of firms also does not guarantee that it will remain in the country.
*This is not a capital control, but on the contrary, it is not an obstacle to exit, as well as it can increase output.
* Companies can make transactions between themselves in foreign Dec.
*Blocking of cheap credit may be in question here
 *There will be asymmetric effects on companies.
* It will cause the idea that the next move will be a forced currency exchange.

SOURCE: sozcu.com.tr/2022/ekonomi/ekonomistler-bddk-kararina-ne-dedi-dovizde-bir-donemin-sonu-mu-7213927/