Prof. Dr. Duran Bülbül evaluates the exchange rate hike! 'The Turkish economy has entered a serious crisis'

Ezgi Sivritepe - 12punto.com.tr

The exchange rate started the day rapidly. The dollar opened the day at 29.97 TL. With this high opening of the dollar, all eyes have turned to the markets. While the long-term trajectory of the Turkish economy and the process the dollar will follow are a matter of curiosity, Prof. Dr. Duran Bülbül noted the following in his assessment for 12punto:

"IT IS NOT POSSIBLE FOR THE RAPID RISE IN FOREIGN CURRENCY TO END"

"He stated that it is not possible for the rapid rise of foreign currency in the Turkish economy to end. Expressing that for the rise in foreign currency to end, the Central Bank must have a positive reserve, Bülbül said, "The Central Bank needs to have a net balance of approximately 300 billion dollars. The fundamental problem in Turkey is this: there is 80 billion dollars worth of 'protected exchange rate deposits' (synthetic foreign currency). These deposits are deposits of non-existent foreign currency, and I believe these deposits will be liquidated. Once these are liquidated, the demand for foreign currency from those holding these deposits will increase, and they will turn back into foreign currency. Even though the Central Bank's policy wants them converted to TL, there is another problem here. Looking at it from this perspective, it is not possible for the foreign currency to stop. Even if the foreign currency had not been suppressed, the dollar would currently need to be above 40 TL. They had said they would never suppress the rate, but we see that the market is still not operating according to its rules. In the coming period, foreign currency will move toward 40 TL. First, it will break 30 TL, then it will evolve toward 35 TL, following a structure that leads to 40 TL."

"TURKEY MUST BE PREPARED FOR DAILY DEVALUATION"

Stating that Turkey is a country that is frequently affected internationally and is easily shaken economically and politically, Bülbül said, "The Turkish economy has entered a serious crisis. The budget has been increased by one hundred percent. If the Central Bank had proceeded steadily, the budget should not have been increased by one hundred percent. Turkey must be prepared for the gradual daily devaluation of foreign currency. Purchasing power will fall, and people will become impoverished. The only solution is that raising prices, increasing taxes, and printing money could ensure debts are covered. For an economy that cannot produce, the only solution is for the Central Bank to borrow."

INVESTMENT DAYS IN THE USA

Furthermore, Bülbül said, "There is no chance for the Turkish economy to reach net reserves in the near term. Turkey must find its own hope. Turkey is currently turning to countries with uncertain sources of funds, and the countries it is turning to do not possess these resources. The reason it prefers those places is that it will borrow at low interest rates. This does not constitute borrowing in accordance with world standards; it is done in the form of banking and loan sharking. In other words, the origin is foreign, but it is lent to Turkey with a loan shark mentality. After a while, the resources in these countries will also run out, and the Turkish economy will contract significantly.

"THE PUBLIC MUST TRUST POLITICS AND THE ECONOMY"

The Turkish public must trust the economy and politics. In other words, they should not wake up to a day where the price of bread, cheese, or their child's school tuition has increased. The capital of international powers also needs to trust Turkish politics. If we can ensure these, we can get rid of the foreign currency pressure. However, it appears that for a long time, we will not be able to escape price hikes, high tax increases, and the necessity of printing money," he stated.

News Source: Ezgi Sivritepe