Exchange rate rises starting to hit sectors in Turkey

When some foreign analysts predicted a couple of months ago the U.S. dollar would reach 3 Turkish Liras, their estimate was not accepted on grounds it was too exaggerated. At that time, there were also those who estimated 3.5 liras, but they were absolutely not taken into account. 

This week the dollar exceeded 3 liras and it does not look as if it will go down. Short-term technical analysts predict 3.2 liras will be reached soon. Those analysts who had predicted the 3.5 lira-dollar exchange rate are now regarded as good analysts. In other words, it would not be a surprise anymore if the dollar reaches 3.5 liras. 

Foreign factors indeed play a serious role in this increasing exchange rate. However, the real reason for the pessimism regarding the exchange rate is domestic developments. In other words, on one hand there is the escalation of terror and on the other hand there is the fact the government has not been formed, and in addition to those, the required decisions not being made in the economy are factors accelerating the hike in the exchange rate. 

In other words, the most important reason for the movement in exchange rates is bad management. In this context, there is also the fact no coalition was formed after June 7 election and a decision was made to hold new elections on Nov. 1, as well as the Turkish Central Bank?s inability to act independently from political power and not make the decision to increase interest rates. 

Including those who say the increase in the exchange rate would not affect them, the hike has reached a point where it affects everybody. Inflation comes first among the parameters it affects. The August inflation data was much higher than expected and its biggest cause was the rise in the rate. The...