Is there no respite in sight for the Turkish lira?


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October 19, 2021

When I rented my first Istanbul apartment, in mid-2013, the Turkish economy was humming and 2 lira were equal to 1 US dollar. A year later, the lira had roughly the same value and, to me, the recently arrived expatriate, Turkey’s currency seemed relatively stable and unworthy of concern – which is precisely when the bottom began to fall out.

By late summer 2015, the lira sat at three per dollar, spurring my landlord to increase my rent by about one third. By early 2017, the lira had fallen to nearly four per dollar and some Turkey watchers wondered if that might be the end of the decline.

Instead, the lira crossed the five-versus-the dollar threshold in mid-2018 and hit six a year later. Then the pandemic arrived: inflation and unemployment have been persistently high over the past 20 months as some 1.5 million Turkish citizens have been driven into poverty. Last week, after a midnight decree from President Recep Tayyip Erdogan dismissed three central bank officials, the lira fell to nine versus the dollar and continued to drop.

The lira has consistently ranked among the worst-performing currencies in recent years and may be headed for 10 versus the dollar by year’s end. Turkish citizens’ rush to trade their liras for dollars and euros last week spurred the government to mandate the use of identity cards for such transactions, presumably in an effort to slow lira departures.

A money changer holds Turkish lira banknotes at a currency exchange office in Ankara last week. Reuters
A money changer holds Turkish lira banknotes at a currency exchange office in Ankara last week. Reuters

As Turkey has remained mired in economic crisis, I have in this column regularly peeked under the hood: detailing the current Turkish government’s unorthodox view of the relationship between inflation and interest rates; the musical chairs atop the central bank; the government urging citizens to shop on a full stomach; a top imam reminding Istanbul's residents that Allah will reward those who survive fear and hunger; debt piling up for farmers and small businesses, and more.

In August, I argued that the central bank governor faced a choice: either cut interest rates or lose his job. He made the cut last month and remains in his post, but inflation has ticked up to a two-and-a-half-year high. From 2003 to 2018, Turkey reduced its poverty rate by 77 per cent. But the rate has since increased nearly 30 per cent. Even as Turkey’s economy registered growth in 2020 and early 2021, the gap between the haves and have-nots widened.

Today, many Turks are struggling to pay for essentials that cost three-to-four times more than they did just a handful of years ago. On Friday, Omer Koc, the chairman of Koc Holdings, Turkey’s largest conglomerate, acknowledged the need for reforms. “It is extraordinarily saddening to see how much the rising pressure from inflation is exhausting our citizens,” he said at a company event.

There is much to exhaust them these days. As the lira plummeted last week, the price of oil crossed the $80-per-barrel threshold for the first time in three years. Goldman Sachs expects the price to remain high for an extended period, which is particularly problematic for Turkey as it produces very little of its own energy.

The government has thus far kept fuel prices relatively stable by eliminating taxes. “But as of this week it seems they’ve run out of tax to forego,” analyst Can Okar said on Twitter, detailing how the government is between the proverbial rock and a hard place. “Now they can either subsidise and make the black hole in public finances explode. Or price hikes.”

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In light of reduced opportunity in recent years, droves of educated young Turks have moved abroad. More than 330,000 people left Turkey in 2020 and more than 40 per cent were under age 35. A recent survey by Metropoll found that 47 per cent of those polled hope to work or study abroad: university graduates and highly skilled workers, in particular, wish to “start over again”. Due to a pandemic-driven decrease in flights and salary, for instance, Turkish pilots have been leaving the country in droves, with many seeking the sharply higher wages of Gulf-based airlines.

Vedat Bilgin, Turkey’s Minister of Labour and Social Security, last week sought to put a positive spin on the wave of departures and growing interest in seeking fortunes elsewhere. “It is natural for young people to have this desire,” he said. “We should not look at them as 'they want to escape from Turkey'. They will get to know the world.”

For university students who remain, the falling lira and a sharp rise in real estate prices have made it prohibitively difficult to find housing. As classes resumed this month, thousands camped out in parks to underscore their plight. Mr Erdogan has denounced the protests and said many of those camping out are not even students.

“This is just another version of the Gezi Park incidents,” he said. In some ways, it does all go back to mid-2013, when the economy first showed signs of sluggishness and millions of Turks took to the streets to push back against early signs of authoritarianism.

The longtime Turkish leader could be forgiven for feeling as if his least favourite movie has been playing on an endless loop for the better part of a decade: the Gezi protests of mid-2013, a massive corruption probe six months later that forced out three of his ministers; his Justice and Development Party losing its parliamentary majority in mid-2015; the coup attempt in 2016, the currency collapse in 2018, big losses in the 2019 local election and finally the pandemic.

Along the way, Turkey’s gross domestic product has lost a quarter of its value, falling from a peak of $960 billion in 2013 to $720bn last year. The global financial system has voted with its feet: in 2013, foreign investors held 30 per cent of lira-denominated government debt; today it’s less than 5 per cent.

Many observers expect that Mr Erdogan’s latest central bank moves were made in preparation for another rate cut, which could extend the lira’s decline and further imperil Turkish consumers. Years ago, Mr Erdogan set the ambitious goal of making Turkey one of the world’s top 10 economies by the republic’s 100th anniversary in 2023. But IMF data published last week revealed that Turkey has instead fallen out of the world’s top 20 economies.

The key question now is just how far the lira, and the Turkish economy, might fall.

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Cinco in numbers

Dh3.7 million

The estimated cost of Victoria Swarovski’s gem-encrusted Michael Cinco wedding gown

46

The number, in kilograms, that Swarovski’s wedding gown weighed.

1,000

The hours it took to create Cinco’s vermillion petal gown, as seen in his atelier [note, is the one he’s playing with in the corner of a room]

50

How many looks Cinco has created in a new collection to celebrate Ballet Philippines’ 50th birthday

3,000

The hours needed to create the butterfly gown worn by Aishwarya Rai to the 2018 Cannes Film Festival.

1.1 million

The number of followers that Michael Cinco’s Instagram account has garnered.

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Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
Red flags
  • Promises of high, fixed or 'guaranteed' returns.
  • Unregulated structured products or complex investments often used to bypass traditional safeguards.
  • Lack of clear information, vague language, no access to audited financials.
  • Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
  • Hard-selling tactics - creating urgency, offering 'exclusive' deals.

Courtesy: Carol Glynn, founder of Conscious Finance Coaching

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COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Clinicy%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Prince%20Mohammed%20Bin%20Abdulrahman%2C%20Abdullah%20bin%20Sulaiman%20Alobaid%20and%20Saud%20bin%20Sulaiman%20Alobaid%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Riyadh%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%3C%2Fstrong%3E%2025%3Cbr%3E%3Cstrong%3ESector%3A%3C%2Fstrong%3E%20HealthTech%3Cbr%3E%3Cstrong%3ETotal%20funding%20raised%3A%3C%2Fstrong%3E%20More%20than%20%2410%20million%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Middle%20East%20Venture%20Partners%2C%20Gate%20Capital%2C%20Kafou%20Group%20and%20Fadeed%20Investment%3C%2Fp%3E%0A
'Texas Chainsaw Massacre'

Rating: 1 out of 4

Running time: 81 minutes

Director: David Blue Garcia

Starring: Sarah Yarkin, Elsie Fisher, Mark Burnham

Fitness problems in men's tennis

Andy Murray - hip

Novak Djokovic - elbow

Roger Federer - back

Stan Wawrinka - knee

Kei Nishikori - wrist

Marin Cilic - adductor

F1 The Movie

Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem

Director: Joseph Kosinski

Rating: 4/5

Miss Granny

Director: Joyce Bernal

Starring: Sarah Geronimo, James Reid, Xian Lim, Nova Villa

3/5

(Tagalog with Eng/Ar subtitles)

Sly%20Cooper%20and%20the%20Thievius%20Raccoonus
%3Cp%3E%3Cstrong%3EDeveloper%3A%3C%2Fstrong%3E%20Sucker%20Punch%20Productions%3Cbr%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20Sony%20Computer%20Entertainment%3Cbr%3E%3Cstrong%3EConsole%3A%3C%2Fstrong%3E%20PlayStation%202%20to%205%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%205%2F5%3C%2Fp%3E%0A
MATCH INFO

Fixture: Thailand v UAE, Tuesday, 4pm (UAE)

TV: Abu Dhabi Sports

FIXTURES

Monday, January 28
Iran v Japan, Hazza bin Zayed Stadium (6pm)

Tuesday, January 29
UAEv Qatar, Mohamed Bin Zayed Stadium (6pm)

Friday, February 1
Final, Zayed Sports City Stadium (6pm)

8 traditional Jamaican dishes to try at Kingston 21

  1. Trench Town Rock: Jamaican-style curry goat served in a pastry basket with a carrot and potato garnish
  2. Rock Steady Jerk Chicken: chicken marinated for 24 hours and slow-cooked on the grill
  3. Mento Oxtail: flavoured oxtail stewed for five hours with herbs
  4. Ackee and salt fish: the national dish of Jamaica makes for a hearty breakfast
  5. Jamaican porridge: another breakfast favourite, can be made with peanut, cornmeal, banana and plantain
  6. Jamaican beef patty: a pastry with ground beef filling
  7. Hellshire Pon di Beach: Fresh fish with pickles
  8. Out of Many: traditional sweet potato pudding
88 Video's most popular rentals

Avengers 3: Infinity War: an American superhero film released in 2018 and based on the Marvel Comics story.  

Sholay: a 1975 Indian action-adventure film. It follows the adventures of two criminals hired by police to catch a vagabond. The film was panned on release but is now considered a classic.

Lucifer: is a 2019 Malayalam-language action film. It dives into the gritty world of Kerala’s politics and has become one of the highest-grossing Malayalam films of all time.

Company%20profile
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Pharaoh's curse

British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.

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  • Technology expert in robotics and automation: Dh20,000 to Dh40,000 
  • Energy engineer: Dh25,000 to Dh30,000 
  • Production engineer: Dh30,000 to Dh40,000 
  • Data-driven supply chain management professional: Dh30,000 to Dh50,000 
  • HR leader: Dh40,000 to Dh60,000 
  • Engineering leader: Dh30,000 to Dh55,000 
  • Project manager: Dh55,000 to Dh65,000 
  • Senior reservoir engineer: Dh40,000 to Dh55,000 
  • Senior drilling engineer: Dh38,000 to Dh46,000 
  • Senior process engineer: Dh28,000 to Dh38,000 
  • Senior maintenance engineer: Dh22,000 to Dh34,000 
  • Field engineer: Dh6,500 to Dh7,500
  • Field supervisor: Dh9,000 to Dh12,000
  • Field operator: Dh5,000 to Dh7,000
COMPANY%20PROFILE%20
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Company%20Profile
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UAE squad to face Ireland

Ahmed Raza (captain), Chirag Suri (vice-captain), Rohan Mustafa, Mohammed Usman, Mohammed Boota, Zahoor Khan, Junaid Siddique, Waheed Ahmad, Zawar Farid, CP Rizwaan, Aryan Lakra, Karthik Meiyappan, Alishan Sharafu, Basil Hameed, Kashif Daud, Adithya Shetty, Vriitya Aravind

Conflict, drought, famine

Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.

Band Aid

Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.

The specs
  • Engine: 3.9-litre twin-turbo V8
  • Power: 640hp
  • Torque: 760nm
  • On sale: 2026
  • Price: Not announced yet
The specs

AT4 Ultimate, as tested

Engine: 6.2-litre V8

Power: 420hp

Torque: 623Nm

Transmission: 10-speed automatic

Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)

On sale: Now

OIL PLEDGE

At the start of Russia's invasion, IEA member countries held 1.5 billion barrels in public reserves and about 575 million barrels under obligations with industry, according to the agency's website. The two collective actions of the IEA this year of 62.7 million barrels, which was agreed on March 1, and this week's 120 million barrels amount to 9 per cent of total emergency reserves, it added.

Royal wedding inspired menu

Ginger, citrus and orange blossom iced tea

Avocado ranch dip with crudites

Cucumber, smoked salmon and cream cheese mini club sandwiches

Elderflower and lemon syllabub meringue

Know before you go
  • Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
  • If you’re driving, make sure your insurance covers Oman.
  • By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
  • Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
  • Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.

 

The%20specs
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EMIRATES'S%20REVISED%20A350%20DEPLOYMENT%20SCHEDULE
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THE SPECS – Honda CR-V Touring AWD

Engine: 2.4-litre 4-cylinder

Power: 184hp at 6,400rpm

Torque: 244Nm at 3,900rpm

Transmission: Continuously Variable Transmission (CVT)

0-100kmh in 9.4 seconds

Top speed: 202kmh

Fuel consumption: 6.8L/100km

Price: From Dh122,900

Updated: October 19, 2021, 5:35 AM`