If Fed says '2016,' lira/dollar parity may become 2.73 - KEREM ALKIN

If Fed says '2016,' lira/dollar parity may become 2.73

As the repercussions of the successful G20 Leaders Summit have continued, with the realization that Turkey is inevitable with regard to the global economic-political balances and that it is invaluable for the security of Europe, along with the consolidation of the fact that it is the West's gateway to the East and vice-versa, followed by the leaders' confirmation of this through body language, the perception of Turkey's economy began to improve rapidly.

The Consumer Confidence Index November report announced yesterday by the Turkish Statistical Institute (TurkStat) showed that the biggest monthly recovery took place since the calculation of the index started in 2003.

The Consumer Confidence Index that was only 62.8 percent in October, reached 77.15 percent with an increase of 23 percent.

This rate is the highest since April 2014. It was almost at this level in 2013, despite the Gezi Park events and the "December 17 and December 25" traumas.

With the "nightmare" perception that was created against Turkey ahead of the elections, the Consumer Confidence Index declined to 58.5 percent in September. It was as though Turkey was going through the darkest economic and political crisis in its history. Therefore, if you look at the period from September to November as the recovery in the Consumer Confidence Index, it is almost at 22 points, in other words, a recovery of almost 32 percent. Firstly, Turkey has shown an endurance that no country could withstand amid the rising terror, political tension, social stance and the wheels of economy; it passed a hard test, and of course with the single-party government a new era started. With the elections behind it, it is expected to focus completely on economy and business until 2019 and make reforms one after the other in areas of economy and democracy.

The recovery in the expectation of the general economic condition reaching 30 percent within a month is the best indicator of the Consumer Confidence Index.

Nevertheless, as the number of those who feared they might lose their jobs reduced, the rate of those who believed that they would continue their jobs increased 31 percent.

'Government Lotto' is not good

Besides this, there are those who link the recovery, moderation and downfall observed since Thursday and yesterday with the lobbying toward the 64th government. It is indicated that lobbying activities toward certain ministers, who are expected to take part in the new government, are causing the moderation in the exchange rates.

Firstly, there is nothing to say about the assumptions and lobbying for Cabinet as this is in the nature of politics. But it is wrong for either the business world or media to turn it into a "government lotto." However, since the beginning Yeni Şafak avoided involvement in lobbying activities carried out with regard to the government and the figures in the 64th government. In the words of certain experienced ministers, "government lotto" is also troublesome in terms of the Justice and Development Party's (AK Party) philosophy: For 13 years the AK Party has been administrating the processes with a settled mindset and in accordance with rules ranging from economy to health, transportation to defense.

However, since June 7, in the last five months, the economy was governed by the deep-rooted principles and mindset of the AK Party, such as financial discipline, sufficiency of the finance system, and the device independence of the Central Bank.

There may be discussions on the growth model; depending on a new growth model, in the public sector protecting the "financial discipline" principle, device independence of the Central Bank, what kind of flexibility in the finance and monetary policies can be formed; what kind of steps can be taken or opportunities can be formed. Of course all these can be discussed.

The AK Party is aware of its being the sıngle party for 13 years and the dynamics involved in preferences of the voters.

The biggest mistake the political power that brought the AK Party to these days would make would be to take steps toward "populism" which would mean the return of Turkey to the 1990s. Nobody will be doing this. The critical point here is, not letting some "familiar" environments perceive the flexibility in the monetary and finance politics and the setup of the new model as "populism." Here, from top to toe the entire political power in the 64th government has an important role in the name of presenting the new road map in the economy correctly.

The dollar may close the year at TL 2.73

There are 25 days for finance markets to close the year. During these 25 days we will follow both the US Central Bank's (Fed) interest rate decision and the European Central Bank's (ECB) decision to further moderate monetary policy.

It has been said that even if the Fed decides to increase the interest rate, it will still be under 0.25 percent, with a 0.10 percent increase from 0.10 percent to 0.20 percent.

The data about the US economy and statements from the Fed authorities are confusing and caused the loosening in the $/TL rate to 2.82. In the dollar rate that should normally be TL 2.23, with Fed affecting TL 0.40, regional policies TL 0.20 and the internal political uncertainty affecting TL 0.20.

As the internal political uncertainty was over after the November 1 election, the dollar rate stuck to TL 2.83.

If Fed leaves the interest rate increase to 2016, the loosening in the USD/TL exchange rate may continue down to TL 2.73. We will follow it every day together.


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