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THere's one fact that people seem to have forgotten: 1USD=1.5TRY back in 2002. Turkey has an inflation that's about 10% (reported, let's go with that). 1.1 ^ 16
by tehlike 8y ago
THere's one fact that people seem to have forgotten:
1USD=1.5TRY back in 2002.
Turkey has an inflation that's about 10% (reported, let's go with that).
1.1 ^ 16 * 1.5 = 6.8 - meaning 6.8TRY would be equivalent to 2002's dollar. US economy and dollar gained more strength in the meantime.
6.8 try/usd is not crazy. The previous exchange rate probably was.
- jules 8y agoA lot of debt is held in foreign currency and imports just got a whole lot more expensive in a handful of days. This is a serious blow, especially if Turks lose confidence in the lira. I can assure you that Erdogan is getting nervous. He can talk about boycotting Apple and buying Samsung all he wants; both phones are now unaffordable for a lot of people who were planning to buy one. Those people aren't going to be terribly happy about Erdogan's flirt with Russian missile systems.
- tehlike 8y agoFor sure. Exchange rate fluctuation of this magnitude is never good. I know companies that worked with dollars are finding excuses not to bill their clients because of exchange rate volatility (if they bill now, and dollar rises after, the seller/biller would take a loss).
- laaph 8y agoI'm not understanding this line of reasoning. Are you assuming the US didn't have inflation in that time? I know it would be less than the lira but even still I'm not sure there would be a direct correlation.
- tehlike 8y agoUs inflation is 1-2%. I over-simplified the logic, but turkish lira lost 10% of its value every year while the us lost 1%. All things equal the exchange rate would track that. Of course it's not this simple, if turkey's lira were more valuable because of our political position, export industry etc, equation would skew, but most of the economic boom in turkey came from construction.