There have always been discussions on interest and exchange rates but in the end, the markets set the course.
Last week, the Turkish Lira dropped past 4 per United States dollar and recovered on March 29-30. Some observers attribute the recovery to the efforts of the companies to draw their balances in the sheets just before the end of the first quarter. Thus, it would not be a surprise if the lira drops past 4 per U.S. dollar again in the following days.
The government on March 28 unveiled a number of measures aimed at reducing red tape to ease doing business in Turkey.
The U.S. dollar/Turkish Lira rate eased from 3.90 after a U.S. Federal Reserve meeting and hovered just below 4 liras toward the end of last week.
At a time when ministers and advisors are still talking about lowering interest rates, the U.S. dollar/Turkish Lira rate hit 3.92 last week. One wonders how interest rates could be lowered if the local currency keeps depreciating.
It is not even mid-March, but market players are already talking about possible scenarios for April. The general consensus is that March and April will set the course for Turkey’s economic outlook. But expectations regarding what awaits the Turkish economy vary.
Turkey’s inflation rate for February was recorded higher than expectations. Consumer prices in February saw a change of 0.73 percent on a monthly basis as the year-on-year rate came to 10.26 percent.
Just like their peers in the rest of the world, Turkish companies must focus more closely on technological developments and digital transformation.
A large current account deficit and double-digit inflation seem to continue to cause troubles for the Turkish economy. If global financing conditions become tighter in the period ahead—as widely expected—damage caused by high inflation and current account deficit will become even more troubling.
