Will the dollar intervene? – Remzi OZDEMIR


Monday 20 June 2022

The most common question I’ve faced in recent weeks: Will Erdogan make the dollar go down as strong again as it did on December 20?

People get dollars on the one hand, and on the other, just like that night of December 20th. cascade fallafraid of

On December 20, the dollar fell from 18 lire to 12.50 lire.

What happened?

He returned there 6 months later.

Minister of the Nabataeans He made a promise to foreign investors in London: we won’t let the rate go up from now on!

Did they give permission? No! Because he the authorization authority is no longer in this economic administration! In other words, these things don’t happen the way we don’t allow or give.

In order not to give in, it is necessary to have a strong reserve and a correct economic policy.

There should be an independent central bank and a monetary policy council that decides according to the rules of the economy.

If 54 countries, including Qatar and Saudi Arabia’s central banks, raise interest rates, if you lower interest rates and create 73% inflation in your country. active in return There is not.

First, they burned $ 128 billion without batting an eye, and now they’re burning what they borrowed.

If the coffers of the Central Bank are negative $ 60 billion, you, as the manager of the economy, have something more to say about the exchange rate. There is not.

In fact, we have seen that it is not.

The dollar has been standing still for days at 17,300.

Let the dollar continue to burn to keep intervention at this level.

We come to the most important question:

Could they launch a product to bring the dollar down sharply again?

They don’t have such a product. There is actually a product they cannot use.

One of them is the inflation-linked bond and, of course, the rise in interest rates, which they have made every preparation to issue before, but have given up at the last minute.

The inflation-linked bonds were sold to the banks. This is the only reason why banks’ balance sheets are full of profits.

What happens if they give it to citizens?

The banking system will suffer greatly. That’s why they gave up on it. After the banks objected, they realized this was not a good idea.

What remains is the weapon of interest.

In other words, an increase in the shock rate by the Central Bank. This is not such a rise in interest rates. The benchmark rate, which is currently 14, is at least 40-50removal a.

Can they do it?

This is politically correct suicide Sara.

You lower interest rates by saying there will be Nas in September 2021, throw Turkey into the lap of inflation woes, then go out and do a shock rate hike!

If they can and do, the dollar will fall.

Will such a shocking decision come out at the Central Bank meeting on June 23?

I think they can’t. But for Tayyip Erdogan pragmatic They call him the leader. I personally have no such hope.

Let’s say the Central Bank made a shock rate hike and the dollar fell.

What happens?

Just like the night the currency safe deposit account is announced. Just as it landed today, it will return to the same spot today. Because it’s not just about interest. There are structural problems, which cannot be done without solving them.

First of all, it is an independent Central Bank. Then the legislative reform. But not so far the reforms. Of course, it is also necessary to guarantee fiscal reliability.

Your hand by TURKSTAT you have to pull.

As long as you don’t, you can earn 90 percent interest if you want, but you still can’t fix the exchange rate problem.

Because Turkey is experiencing a great shortage of dollars and this shortage will increase.



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