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Turkish Lira is plunging down? Expected reasons & prediction?

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Hey members,

 

How are you all? I hope all are good; Last three months have seen a very steep plunging of Lira against USD. From 2.9 to 3.8 (as of 11 January). What are possible causes? What can be the solution and at what rate can we expect the Lira to finally be stable at?

 

Any good economists or economy related people around to give suggestion or verdicts? 

 

Looking forward.

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I am no economist or a fund manager, in my opinion the International players and the global money market is playing with the Turkish Lira as it showed vulnerability. I  heard from some close quarters, the money markets around the world have made fortunes while simply trading against the TL, taking advantage of the situation. There is no doubt that the inflows of US dollar and foreign exchange investments shrunk , tourism sector took a hit, hence putting more pressure on the economy.

In my opinion Turkey has strong fundamentals, having large young population and a broad based economy, stronger than majority of the European economies. I see a come back around 3.0 level range by the middle of this year.

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Uncertainty cause a slump in currency, look at sterling after the Brexit calamity. The world markets are not sure about the direction Turkey is heading. Wild statements by important people also cause uncertainty.

 

I am certainly not selling any sterling until it reaches 5TL, next week then?

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From what I am reading, it doesn't look like the situation for the Turkish Lira is going to improve for a while. I think any country which has a coup, not to mention the other problems Turkey has right now,  is going to be considered a risky place to invest. And if you invest in a country, you have to invest using their currency. When investments drop, demand for the currency drops, then the price drops as investors find safer places to put their money. I remember back in 2000 when Prime Minister Bulent Ecevit had an argument with another government official, which indicated that the government was going to do nothing about corruption and graft. It was on TV. Just that alone caused investors to pull their money out overnight. The Lira dropped to what, at the time, was something like 2.5 to the US dollar. In fact, you couldn't even exchange money at the currency exchange place because nobody even knew what a Turkish Lira was worth. And now it's dropped to 3.7 or so. And my rent for a three-bedroom apartment is now less than $200 USD.

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The main reasons are political unstability( prolong state of emergency), increasing in terrorism and the low rate of production. These causes the uncertainty and market take consideration while pricing the TL. A solution might be balancing our debts, incerasing our export volume and crack down on our public expenditures and making reforms on education but these are for a long-term solutions. I believe it is impossible to predict the fate of TL against U.S Dollar or Euro due to uncertainty.

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It pains me to see my in-laws/family/Turks etc struggle with the fall in the currency value...but on the flip side its good for expats like myself that actually would like to invest in the country (whether it be property etc.).

 

At some point the economy will rebound...for now I will sow my crops and reap the benefits as much as I possibly can.

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I would only invest if you are determined and happy to be in Turkey. Certainly not with a hope of future profits. The economy and politics are totally out of our control. Others will determine the fate of your investments.

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12 hours ago, IbrahimAbi said:

I would only invest if you are determined and happy to be in Turkey. Certainly not with a hope of future profits. The economy and politics are totally out of our control. Others will determine the fate of your investments.

Very True.  However, family & I have been in the market for a home somewhere on the Med.  As the exchange rate seems to hover around the 3.50-3.80tl region, its pretty good IMHO.  For those with the ability to purchase a home from foreign currency...this is the time.

It's only a matter of time until the bubble bursts.

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I might be wrong, but I don't think it's a bubble, even though the government is comparing currency traders to terrorists. I think it's a natural consequence of the situation right now. I think things will get better, but not for quite a while. I have been reading that property values are increasing, the buyers of property being from middle-eastern countries. But the currency devaluation is certainly offsetting that. It's probably a good time to buy property in Turkey right now. And it's also a good time to pay rent!

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20 hours ago, Ken Grubb said:

I might be wrong, but I don't think it's a bubble, even though the government is comparing currency traders to terrorists. I think it's a natural consequence of the situation right now. I think things will get better, but not for quite a while. I have been reading that property values are increasing, the buyers of property being from middle-eastern countries. But the currency devaluation is certainly offsetting that. It's probably a good time to buy property in Turkey right now. And it's also a good time to pay rent!

Seriously though...you are absolutely right.

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Noorah, Please don't hesitate to invest in Turkey. All is going well, Turkey has the strongest economy in the region.

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I would be wary of investing too much here at the moment. The economy is not too stable and there is a chance that the central bank's policies may be controlled by the government.

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