“Omran Trk” monitors the reality of the Turkish lira from the point of view of economists

الليرة التركية عمران ترك

Omran Trk Real Estate Company, headquartered in the state of Yalova, continues to follow developments related to the exchange rate of the Turkish lira, especially after it crossed the 11-lira barrier to the dollar.

Omran Trk monitored the opinions of a number of economic analysts and those interested in economic affairs in Turkey, which confirmed the positive decline of the Turkish lira in the current period, in contrast to the rumors of negative repercussions on the Turkish domestic affairs.

The beginning was with Counselor Khaled Shabib, professor of law and economics at the General Council of Islamic Banks, who explained to Omran Turk how the decline of the Turkish lira reflected positively on those wishing to invest during this period in Turkey.

Shabib said:

  • The real economy is the productive economy that Turkey is heading to because of reducing interest towards zero, which is heading to factories, industry and framing the workforce.
  • Currency depreciation is not an absolute evil, as individuals may be affected by it and institutions benefit from it, especially institutions, factories, and industrial companies exporting and thus the economy in the country and here the Turkish economy is meant.
  • Citing what Robin Brooks, chief economist at the Institute of International Finance (IIF), said: All current analyzes about the Turkish lira are “chatter aimed at sowing panic.” Brooks added that some expect the current situation regarding the Turkish lira and the dollar to continue for as long as There is no end, do not pay attention to any of these analyzes. All of it is nonsense, and he stressed that there are no indications of a state of dollarization resulting from the confusion, and he added: “The movement of the flow of foreign deposits is moving in a horizontal curve given the average movement during the last 13 weeks, and pointed out that the crisis that Turkey witnessed in August 2018, it was bigger than what is happening now.
  • The question that arises is what is the impact of a decrease in the interest rate on the exchange rate? The answer is, yes, a decrease in the interest rate affects the exchange rate, but only in the short term and not in the long run.
  • If the appropriate tools were made available by the economic administration, the interest rate cut would have a positive and excellent effect on the exchange rate and the economy as a whole, because of that it had a significant impact on the rate of exports.
  • Perhaps it is useful to point out two points, the first: The exchange rate of the lira fell against the dollar (assuming the dollar was stable) about 15 to 16% during the past year, which is in fact the inflation rate announced in Turkey, and therefore the decline in the exchange rate may be a natural thing and a reflection The inflation rate is nothing but, and the evidence for this is that the growth rate of the Turkish economy has reached 21%.
  • Turkey’s economy is industrial, and by the way, this inflation rate is lower than the inflation rates in many countries.
  • The second point: It should be noted that the exchange rate of the dollar against other major currencies also rose in favor of the dollar during the past few weeks, for example: against the euro it was 1.21 dollars per euro.
  • We conclude by saying: Turkey has moved to the 13th place among the twenty largest economies in the world, and it is heading towards No. 10 in the coming years.

For his part, an analyst interested in Turkish economic affairs, Muhannad Hafizoglu, told Omran Turk: “It is true that this decline has many reasons and many negatives, but it contains benefits for those who want to invest, because the investor will benefit from the currency difference and therefore will be for those who wish to invest. Investing is an important opportunity in this period.”

He added, “In the end, the investor has this decline in his interest, especially in the labor force and some products destined for export, and the trader knows how to properly and beneficially exploit this current situation of the lira.”

In this context, the Turkish Central Bank announced that the interest rate was reduced by 100 basis points on “repo” repurchases for a week, to 15%, according to official Turkish media.

The Monetary Policy Committee of the Central Bank of Turkey, headed by Governor Shihab Kavucioglu, stated that it decided to reduce the interest rate from 16 to 15%, after evaluating the factors that affect monetary policy such as demand, core inflation and supply.

He stressed that the Central Bank will firmly continue to use all the tools available to it until strong indicators appear indicating a permanent decrease in inflation and the 5% target is achieved in the medium term, in line with the main objective of price stability.

It is noteworthy that on October 2021, the Central Bank cut the interest rate by 200 basis points on “repo” repurchases for a week to 16 percent.

الليرة التركية عمران ترك تركيا

In turn, the economic analyst, “Yahya al-Sayed Omar”, said on his account on “Facebook”, “The Turkish government, in order to improve the situation of the Turkish lira, has two solutions:

  • The first solution is to tackle inflation by raising the interest rate. Which leads to a decrease in the amount of the pound in the market and its concentration in banks. Indeed, here inflation may decrease and the value of the lira will improve.
  • This solution is a temporary solution and has several negatives, as it harms production as a result of high financing costs, imports increase and exports decrease. This solution can be likened to the sedative given to the patient. It gives it some relief, but as soon as its effectiveness ends, the patient returns to pain.
  • The second solution: reducing the interest rate, which is what the Turkish government is currently pursuing, and this solution addresses the roots of the problem, in that it stimulates production as a result of the low cost of financing, and stimulates export and pressure on import.
  • This is a medium-term solution, meaning that its results need for several months, not less than 6, to start appearing. In the first stage, it causes a deterioration in the currency and an increase in inflation. Here, this situation can be likened to treating the patient. Annoying side. But in the end it leads to the recovery of the patient.
  • For this reason, lowering the interest rate would support the Turkish economy, generate more job opportunities and raise the prevailing wage rate, but all these effects will only be achieved in the medium term, and for this it can be said that the lira may continue to decline at a moderate pace until the results of these start politics to appear.
  • It must be noted here that lowering the interest rate may push some to borrow and convert loans into dollars, which causes additional pressure on the lira, and here the government must follow some measures to block the way on loans so that they do not end in speculation and transfer them to productive sectors.
  • In addition, one of the procedures that can be followed here is to impose some conditions on borrowers, such as submitting feasibility studies for projects wishing to finance them, in addition to granting graded loans, so that loans are provided in successive installments commensurate with the stages of progress in the project.
  • In the end, it must be noted, however, that taking note of the reasons leading to the deterioration of the lira cannot be covered in a few lines, especially since the value of the lira is linked to several factors, and determining the value of any currency in economics requires several pages and studies, but the most prominent points related to these were highlighted  the case.

As for the Arab businessman “Abdul Aziz Al-Kashef” and the Chairman of the Board of Directors of “Omran Trk”, he saw that “the Turkish lira in its current situation is an unprecedented opportunity for those interested in the real estate and tourism sector, especially from foreigners, as we began to notice an active movement for several weeks in these two sectors.”

He continued, “For everyone who asks the Turkish lira to where? I think that this period may be temporary in the context of the ongoing economic war against it, and every time we find that it has returned to stability and thwarted all the plans targeting it.”

A few days ago, Turkish President Recep Tayyip Erdogan highlighted the reality of the economy in Turkey, saying:

  • Is it possible for the economy to deteriorate in the medium and long term in a country with increased investment, production, exports and employment, record growth and a low current account deficit?
  • Developed countries are on the brink of the biggest economic depression since World War II.
  • It is clear that this will be followed by social and political crises.
  • Turkey, thank God, occupies a good position in this dire global scene, in terms of its production, exports, as well as employment, thanks to the strong infrastructure that we have established over the past 19 years.
  • Anyone who knows the real economy closely and has contact with the world is clearly aware of this fact.

Erdogan concluded, “A bright future awaits us if we can overcome the years 2022 and 2023 without an economic recession, and move forward in line with our desired goals.”

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