The economist Necmettin Batırel, who in December called for the exchange rate with dollars and whose forecasts were realized in a very short time, said that this time the exchange would drop to 14.25 lire.
Here is Necmettin Batırel’s prediction:
The Banking Regulatory and Supervision Agency took a very important decision when it found that the loans had not been used for their purpose. The company, which has over TL 15 million ($ 900,000) foreign currency assets, is prohibited from taking TL loans …
The company, which is under TL 15 million, will take out a loan with a promise not to exceed this figure.
Let’s make it more understandable. If companies have more than £ 15 million in foreign currency deposits, including foreign currency and gold, in cash at the time of applying for TL loans, their applications will be rejected. The BRSA explains why it made this decision as follows: “Although some companies have an excess FX position, it has been observed that they have purchased foreign currency using TL loans. In other words, TL commercial loan assets on favorable terms, which should go to production, employment and investments, continue to be used for the purchase of foreign currency … ”
Why companies are buying foreign currency instead of switching to currency-protected deposits, here’s the real problem. Was this move deliberate?
It is for sure. If the company wanted to use a TL loan, the exchange rates went down as it had to sell more than $ 900,000 in its safe. There are 195 companies that have more than 10% of their FX position surplus assets or sales revenue from the past year. These are more than a third of the BIST companies. Therefore, its shares were sold hard with the banks, but it was not permanent, the low prices became a buying opportunity.
The total debt of private sector loans from abroad and the sum of the main repayments to be made within 1 year is at the level of 45.9 billion dollars. However, as of today, companies have $ 80 billion in banks. You see how big the difference is, right?
According to BRSA data, companies hold about 60% of their total foreign currency deposits as of June 17. This regulation will only concern companies subject to auditing. Most SMEs were excluded. At first glance, the BRSA operation can be seen as a repeat of the currency-protected move that took place on the evening of December 20 …
But it is never a capital control. Only companies with a foreign exchange surplus were taken very badly …
With this decision, unfair profits were avoided. The demand for artificial currency was thus blocked …
I would like to point out: the main purpose of the BRSA is not foreign currency, but to ensure that the loans are used in existence.
Now the banks will lend to the projects. Payment will be made on the proforma invoice brought by the requesting company. Therefore, the loans granted will be used entirely for investment purposes.
However, when the carpet was removed, the scene seemed to be very different. It turns out that companies have raised a lot of foreign currency with the TL loans they have taken. As a result, exchange rates have risen excessively, costs have risen, and the country has finally fallen into the hands of the inflation monster. Now this chain is breaking. This excess foreign currency purchased once will be returned to the market. The foam on it will be lifted and the Turkish lira will quickly regain its real value ($ 1 = 14.25 TL). The government killed 3 birds with one stone.
In the first place, starting in July, the risk of currency demand created by the exchange-protected yield of the companies was thus eliminated. This decision will cut a possible demand and, even more, the supply of currency will increase by pushing companies to sell foreign currency according to the established criteria.
Secondly, by ensuring the proper functioning of the credit mechanism, Turkey will remain in the crucible of stable growth.
Thirdly, the artificial increase in exchange rates has been curbed and excessive increases in the prices of imported intermediate goods, in particular fuel, as well as food, fertilizers and seeds, have been prevented. Whoever collects dollars because it will be 25 lire (among them there are professors) weeps for this decision! ..
These are crocodile tears. My people are laughing, this is the main thing. Here’s the government that knows its business, here’s the team that knows its business. Here is the result … Good luck.