Turkish lira hits the lowest against dollar

0 Comment(s)Print E-mail Xinhua, December 15, 2014
Adjust font size:

Turkish currency the lira dropped down to its lowest level since January against U.S. dollar with 2.33 liras on Monday.

When answering the questions of Xinhua, Alp Aksu Dogan, a senior investment consultant of CONSULTISTA, said there is the possibility of the lira to drop down even further and reach 2.40 during the first months of 2015.

However in the short run, he said, there is nothing to worry about.

"The fall of the lira against dollar has been expected for some time period as the year comes to its end. Some foreign financial players close their position in Turkey," Dogan explained, "they sell their assets and park their funs in foreign exchange. This typical end of the year move, in return creates demands on dollar."

Turkey's central bank (CBT) is ready to intervene to prevent the fall of Turkish lira even more, he said.

"CBT wouldn't let the lira to fall even more until the end of the year. It will intervene step by step because the foreign exchange at the end of the year will determine the companies' profits. High foreign exchange rate will result in serious fall of the profits leading to the decrease of the state's income taxes," he said.

In the long run, the high levels of foreign exchange rates have the potential to harm Turkey's economy, drawing the inflation rate up, he said. As of November the inflation rate has been revealed as 9.15 percent.

Zeliha Sarac, a financial economist, told Xinhua that the reason behind the fall of the lira against dollar is U.S. Central Bank FED, which will have its 2014's last meeting on Wednesday, Dec. 17.

"It is still not clear weather FED will pursue the goal of hiking the interest rate, if yes, how much or what will be terms to be used? These will be determinant," she explained.

"This uncertainty has been creating a tension over dollar and over the interest rates since last Friday."

Turkey has also been passing through a turbulent period as Turkish government launched an operation against journalist for alleged link with the U.S.-based cleric Fethullah Gulen.

Turkish police detained 23 people in 13 provinces during the operation on Sunday.

Erdogan Turan, analyst at GCM Stock and Bonds, said that it would be too early to state the fall of lira against dollars as permanent.

"First of all, we should wait for the internal political turbulences to be relieved. Second, we should see the result of the FED meeting. Markets have been expecting an announcement from FED stating that there won't be any increase in the interest rates," he explained.

"Only after that we should expect CBT to intervene," Turan said, adding that "otherwise it would be too premature to declare a state of crises."

He also pointed out that due to the FED meeting, the emerging markets have been experiencing the same fluctuations. However, in Turkish lira the fall has been realized more sharply as a result of internal political tension, Turan said.

In the mean time, Turkish Statistical Institute (TUIK) has released the unemployment rate on Monday and stated that the unemployment has increased to 10.5 percent in the three months between August and October. This is the highest figure since February 2011. Endit

Follow China.org.cn on Twitter and Facebook to join the conversation.
Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Enter the words you see:   
    Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from China.org.cnMobileRSSNewsletter