The story of increasing foreign currency deposits that made observers wonder if this is so, the probability that we have come to an end for a while has increased more than ever.
Although it did not make up for the spring exit in 2020, large amounts of capital inflows have been observed since November. The capital inflow of $ 15 billion in the nine-week period after the personnel change and the increase in the interest rate in economic management was due in part to the change in global financial conditions. The end of 2020 and the beginning of 2021 not only offered profitable investment opportunities to foreign players, but also commitments were made to avoid the depreciation of the lira for a relatively long time.
The continuation of high interest rates and a slower recovery than those at the top would like, along with other macroeconomic problems, may disrupt this new story after a while. However, we can say that in the first six weeks of 2021, the Turkish lira has become one of the most appreciated currencies against the US dollar.
Interest and millions rose “IPO feast” yönlendiriliyork stock market in Turkey under the name of one of the economic management headaches; One can think that dollarization, which is at a level that will affect the composition of the financing of the banking sector and the conversion of corporate debt, has come to an end. In fact, if buying dollars or staying in the dollar causes some of the three-cent savings to dissolve, the rational citizen is expected to change currency and deposit the money in deposits in national currency, or direct his savings. to financial assets in lira. However, there is also an obligation as part of the problem.
In this article I will only address a small part of the multidimensional problem. While I wait for the foreign currency deposits to dissolve, I am going to depict with thick brushstrokes the image created by the lira that favors foreigners while citizens insist on foreign currency and that memories and traumas of citizens are no longer taken into account coded as inverters.
ATTACK FOR GOLD
The flow of dollars and gold under the pillow to financial markets and the transition to lira assets are an objective that is mentioned almost as often as the production of high value-added products. this kind of daydream branching out of the savings of the politicians people in Turkey to be able to take leave before decades. At a time when businesses’ need for dollars is growing rapidly and access to global finance is difficult, calls for foreign exchange are intensifying.
In August 2018 Speaking at Rize in the heart of the currency crisis Taking the calls to sell dollars, which he had repeated for months at every opportunity, one step further, he presented this call by analogy with joining the front lines in an economic war:
“They think that; Turkey jumped for the exchange rate will be demolished, commissioned by straightened things knee financial instruments will collapse this nation, this country will be handed to us differently by applying the law. These are bullets, cannonballs and missiles of the economic war against our country “.
Though mired in political discourse in Turkey, he considered that provision of the invitation to find transitional pounds. However, when these calls become intense (though not just from making calls) they are counterproductive. Between 2015-17 that households increased their gold deposits by 55 percentWe see that total foreign currency deposits increased by 50 percent from mid-2018 to 2021. We can describe the first period as a gold rush and the second as a dollar rush.
The data that we have allows us to say that the race towards the dollar continues, after repeated calls by the president to defend the homeland. If we put weekly volatility aside, the 2.5-year course shows the following: The idea that currency attacks were delayed in fall 2019 slowed the rate of increase, but the increase continued. During the first wave of the pandemic, economic closures stabilized the increase in foreign currency deposits. So.
Loans through stimulus and economic openness, before his eyes again the basic paving accumulation problems of all in Turkey, from where the purchase of foreign exchange remained. As if they are all linked, they are all terrorists!
MIRROR THAT REVERSES HOUSES
In early February total deposits in foreign currency in banks It was equivalent to $ 262 billion. There was a 15 percent increase compared to the start of the pandemic in 2020, and there was no decrease in the latter period when the lira gained value. For this reason, it has been written frequently in recent weeks that the management of the economy behaves as if to teach a lesson to these affiliated citizens and that a “reverse dollarization” is expected. During the rapid appreciation of the lira in 2021, the lack of a meaningful attempt to offset the reserve has made it easier for US $ 1 to fall below Turkish lira 7.
I would like to emphasize two errors of economic management without incurring the error of the expression “reverse dollarization” in Turkish terms. The first is the prejudice of family behavior that prevails over the Central Bank economists and those who have a similar tradition. CBT’s Financial Stability Report and households throughout the year based on the economic outlook brought financial stability as the backbone located in Turkey. Households that reportedly sold foreign currency while the dollar rose and bought foreign currency while the lira gained value were described as automatic stabilizers in those reports. Whereas, for years, it is your behavior in the opposite direction.
The second point is that despite the fact that fish are accused of being memorized, citizens also do not forget the decisions and turning points that are made in crises that live as trauma. The working memory here can be fragmented and fuzzy, some items may be suppressed, but the memory still works, the calculations are constantly being performed, and the dollar scenarios are still the most listened to.
COMPULSORY COURSE: INTRODUCTION TO DOLLARIZATION
Continuation of the article here.