Uğur Gürses

author@duvarenglish.com
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Central Bank's Beştepe problem Governor of the Central Bank of Turkey is not concerned with the inflation rate. He only thinks about how he can deliver the decision of an interest rate cut long demanded from Beştepe to real life and how he can prepare for this policy step.
Dream economy for dreamland Turkey According to Turkish Statistical Institute (TÜİK) data, the annual intermediate goods cost increase was 54.7 percent and the manufacturing costs increase was 45.4 percent in August. The annual exchange rate increase is 15 percent. How long can exporters and producers in be able to sustain this situation while they are under the pressure of rising costs? Watch and learn how to deal with interest rates As of the end of July, Turkish Treasury’s domestic debt of foreign currency and gold was $28.2 billion. The cost of this stock will be clear as it matures. Now Ankara needs “pure luck” so that the exchange rate and the price of gold ounces to be low on the due dates of those debts. These debts are one of the many wrecks that will be left to any new government.
What happened to the $128 billion? The figure “$128 billion” is the sum of the drop in Turkey’s Central Bank’s foreign currency reserves over the past two years. Maybe this figure is more than that. Those who ask, “Where is the 128 billion?” are not only referring to an evaporated fund. Here is a complete list of essential questions which Turkey's ruling Justice and Development Party (AKP) ought to answer on the eroded reserves of the Central Bank. Turkish fairy tales of reform in economy In a country, where a deputy is ripped off his political immunity because of a tweet he has reposted from a news site, and where a political party which has received more than 6 million votes is prosecuted so that it can be closed; the economy management is left with only one tool of raising interest rates. Fragility due to eroded reserves in the Turkish economy The extraordinary loss of reserves in Turkey's floating rate regime was experienced by the Central Bank under the political directives of the Albayrak era. Minister Albayrak did not even feel the need to make a public statement and answer questions when he left office with an Instagram post. . But now he is reportedly going to sue those segments waiting for answers because “his personal rights were violated.” Will Turkey's new CB governor play it hawkish? Turkey's new Naci Ağbal has gained quite a lot of reputation in three months since taking office. He has also succeeded in outclassing verbal and written communication from the Central Bank. Will he be able to institutionalize this “hawkish stance?” Turkish economy at low tide After the November 6 dismissals from the economy management, prominent politicians Lütfi Elvan and Naci Ağbal took over, both known for their technical skills. Elvan and Ağbal’s efforts to “keep the ball in play” is understandable, within the restricted area drawn for them. However, recent developments suggest that this is also coming to an end. Adventure ends in Turkey’s economy The problems in Turkish economy, that were swept under the carpet as we were entering 2020 have now grown even bigger with the adventurous policies of 2020. There is no path left to sustain it. Thus, the problem of the lack of growth of companies and the issue of not being able to pay the debts will take Turkey closer to the doors of the IMF in 2021. Real story behind Turkey’s third quarter economic growth According to the Turkish Statistical Institute (TÜİK) data on national income for the third quarter, durable consumer product expenditures increased 61 percent. There is no such period with such an increase in the past 10 years. The summary of Turkey’s third quarter growth is the gigantic credit growth, the boost in durable goods consumption and gold imports. As a result, we have a boost in foreign exchange rates, an inflation of 20 to 30 percent pace and loss of employment. Between a rock and a hard place Before that weekend when two key Turkish officials in the economy lost their seats, on the evening of Nov. 6, Turkey’s position was a threshold where either capital control would be declared so that we would become a closed economy or we should immediately approach the IMF. Both of them are the least preferred options for Erdoğan within the context of politics and past discourses. This is a governance crisis The increasingly authoritarian administration in Turkey was named the Presidential System of Governing in 2018. This system is grinding down whatever comes into the whirlpool it has created including the economy, institutions and rules, even the circles of nepotism they have authorized. Fire department adding fuel to the flames The Central Bank of the Republic of Turkey (CBRT) continues to be a part of the economic policy conducted by the government. The ground of the economic crisis was laid with the fire of a political crisis. It moved to a new level with the pandemic. Now, there is no possibility left that the Central Bank helps bounce back or curbs the situation. Ankara's new economic program and efforts to trivialize problems The effort of “trivializing the issues” demonstrates the stance of Turkey's economy administration of “intervening on the symptoms and not on the issues.” It is the effort to sooth the society, to narcotize them by saying, “If you do not know, have not heard of it, if you do not care, then you are happy.” Very expensive economic lessons for Turkey Our economy administration wasted billions of cash foreign currency of the Central Bank and public banks just to maintain a self-styled economy policy and to keep the foreign exchange rate at a certain level. It is a pity that now, this economy management, with its collapsed economy policy, is resorting to the monetary tightening of the Central Bank. Economic discontent deepens, so as misconception of Turkish gov't Unlike what those in Ankara who are managing the economy believe, 51 percent of the economy is not psychological perception, it is trust. Empires of fear do not generate trust. Superior minds connecting sovereign rating and natural gas Those who are ruling the country are spending so much energy on blaming vague foreign powers for all the wrong and bad management. If they could have channeled this energy to understanding the problems of the country, then we would have gone a long way and truly would have made these “foreign powers” envious of ourselves. How ‘local dollars’ printed by Turkish Treasury Turkish Treasury is “printing” forex bonds to create additional foreign currency for its own operations. Public banks, on the other hand, are spending their cash foreign currencies and replacing them with forex bonds the Treasury is printing. The forex regime invented by Ankara collapses For a long time, Ankara had eroded foreign currency reserves worth near 100 billion to hold the rate. Now, it has come to the end of the road. It has spent its last penny and left the rate to the markets. Thus, the “unheard of” invented exchange rate regime has collapsed. The forex vacuum in Ankara Can the forex loss in Turkey be recovered without sending the bill to the public? If first signs of the establishment of political normalization, democratization and rule of law emerge in a powerful way in Turkey, then the “shrunken” foreign currencies will come back to the system. Economic wreckage due to ‘votes erosion syndrome’ of the AKP If the ruling Justice and Development Party (AKP) sees an increase in erosion of their votes and the increased possibility of losing power in a possible election then it would "use all the ammunition till it is finished" for their own political continuity. But this would indeed mean leaving a “gigantic wreckage” for the citizens of the country. Adventurous economic policy experiment in Turkey The trend in that started just before the presidential elections in 2018 and accelerated after the elections changed the chemistry of the economy in Turkey. Private sector in Turkey was restricted in every aspect. From pricing to sourcing, to investment licenses, all regulatory higher bodies worked to make the entrepreneurs feel that ‘the party state’ was watching them at every step. Turkish Lira testing waters in Syria A currency, that is losing value and is not the good money to its own citizens, cannot be the good money of another country. Most probably those who declared they have switched to the Turkish Lira in Syria will be doing their payments in Turkish Liras and - even if it may be only a few pennies - they will keep dollars to store the value of their accumulation. COVID-19 not only health but also poverty outbreak No matter how long or short the COVID-19 crisis lasts, a broad range of working masses, but especially the unskilled labor force will be the ones exceedingly affected. They will lose income and their jobs. As a result, inequality will spread on a mass scale and poverty will soar. Seeking a remedy from the 70s model policy toolkit Ankara thinks it can obtain stability through the sale of foreign currency from the “back door,” which erodes reserves. Ankara has also resorted to bans and restrictions on foreign currency, but these are actually very old tools from the 70s. Our Turkish Lira with its wounded convertibility The economy management in Ankara may have this thought of stopping the devaluation of the Turkish Lira by wounding the lira’s convertibility but actually it also damages the debt capacity of the Treasury. Guidelines for beginners for intervention in forex What would we have included if we wanted to write a guideline for those who have the wish to intervene in foreign exchange rates but who do not have the adequate experience, but at the same time want to do it right? Taking into consideration today’s circumstances in Turkey, here is a list. Fear of floating in Ankara In those countries where it is presented as they have a “floating exchange rate regime,” if their central banks are intervening at the exchange rate, the name of this in economy literature is “fear of floating.” Ankara’s dream of Fed swap line Since the COVID-19 crisis erupted, Turkish Central Bank’s reserves fell nearly 20 billion dollars. Now, the thought of “Can there be a swap line opened from the U.S. Central Bank Fedreserve ?” is in question. Underlying diseases of Turkey’s economy during corona days Turkey was caught with the coronavirus outbreak at a time when it was weak structurally. Just like in the COVID-19 epidemic, the underlying disease story is the story of those problems in economy which were “swept under the carpet” for a long time. Turkish government's economy policies after 2018 were based on bans, limitations and covering up of the symptoms rather than resorting to necessary steps to solve the problems.