Turkey: Total pound recovery over 40% – $ 50 billion in reserves, opposition says

LAST UPDATE 14:52

Turkey continues to pleasantly surprise the markets for the time being, following Erdogan’s announcements about new protection mechanism for deposits in Turkish lira.

The Turkish currency traded at 11.48 against the dollar, recording a rise of 4.63% when on Monday afternoon the exchange rate of the two currencies had reached 18.41. Overall the recovery has reached 40%.

Apart from analysis made by the Turkish president on how the new mechanism works, which may sound encouraging, but hides huge inflation traps, the Central Bank of Turkey (TCMB) has launched a new injection to stimulate the currency. The TCMB has reportedly spent more than $ 7 billion in the foreign exchange market over the past three days to reverse the situation.

In addition, the TCMB released on December 22 the first issue of exchange rates that will be used as a basis for Erdogan’s new mechanism, which according to reports was intended to be used in the past, during the last currency crisis in 2018 and has an activation valve, when the exchange rate reaches 18.

According to banking data, the US dollar / pound exchange rate was 12.35 for buying and 12.37 for selling, while the exchange rates were 13.9 and 13.93 for the euro, respectively. The exchange rates will be released by the bank every morning.

“Individuals who already had a foreign currency deposit account or a foreign currency participation fund in dollars, euros or British pounds by December 20 and converted their accounts into time deposit accounts in Turkish lira / equity funds will be eligible. to take advantage of the incentive, “TCMB said in a statement. The bills will run for three, six and 12 months, he added.

The interest / profit share to be paid on deposit accounts / equity funds in pounds will be compared and the difference in exchange rates at the beginning and end, and the holder will be reimbursed if necessary. Regardless of the exchange rate on the day the account is opened and the exchange rate at the end of the termination, the capital and interest / profit share will be paid to the customer by the bank.

At -50 billion dollars in reserves, the opposition says

The main opposition Republican People’s Party (CHP), led by former Finance Minister Faik Ozrak, who helped Turkey successfully implement an IMF program in the early 2000s, said in a report this week. Forex sales totaled $ 6.5 billion between December 1 and 17, including $ 6 billion in foreign exchange interventions, the Cumhuriyet newspaper reported on Thursday.

That brings TCMB’s total intervention to $ 13.5 billion in December alone.

The central bank’s reserves, net of liabilities such as foreign exchange, stood at less than $ 50 billion, the CHP said, according to Cumhuriyet.

The Minister of Finance is in conflict

Throughout this crisis, the new Minister of Finance, Nurettin Nebati, proves once again that he is in this position by a clear choice of Erdogan. In his television presence, he brought a journalist in great embarrassment, who heard the Ministry of Finance of the country tell her that the Economy is not numbers, but … the glow in his eyes!

The typical dialogue:

Journalist: The Central Bank announced the new measures for deposit guarantees, increases against the dollar and the euro. How are the numbers?

Turkish Ministry of Education: Do not refer to numbers. But they are doing well! Mrs. Gulchin, look into my eyes! What do you see in my eyes?

Journalist: I see the joy, Mr. Minister, but the economy is the numbers!

Turkish Ministry of Education: The economy is numbers you say, but numbers are expectations. The economy is confidence, the economy is stability, the economy is the gleam in the eyes! My colleagues see the glow in my eyes!

Petros Kranias

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