Fuel prices rise in Turkey as of tonight – Turkey urgent

Fuel prices rise in Turkey as of tonight – Turkey urgent
Fuel prices rise in Turkey as of tonight – Turkey urgent

Fuel prices rise in Turkey as of tonight

The Union of Power Plant Owners “EPGİS” has announced a fuel price increase that will take effect from midnight.

The union stated that the price of a liter of gasoline will increase by 1.02 pounds, the price of diesel will rise by 1.06 pounds, while the price of a liter of liquid gas “LPG” will increase by 65 piasters.

This increase coincides with the large fluctuations that the Turkish lira has experienced recently.

The real reasons for the collapse of the Turkish lira to historical levels

The decline of the Turkish lira in the foreign exchange market has crossed the “historic peak” barrier that it had reached a few days ago, in an indication that some economists see as a “risk”, especially after the Central Bank’s decision to cut the interest rate by 1%.

The Central Bank’s decision came after Turkish President Recep Tayyip Erdogan said, last Wednesday, in front of the ruling Justice and Development Party’s parliamentary bloc: “The government is determined to remove the scourge of high interest rates on its people.”

This year, the Turkish lira lost about a third of its value, with experts expecting its continued decline, to close at 12 liras at the end of this year.

As the Turkish lira continues to decline against the US dollar, many of the same questions arise about the Turkish president’s decision to cut the interest rate, its pros and cons, the impact of the decline on investors and trade, and whether Ankara is heading towards an economic crisis.

In order to find out all these questions, the “Step News” agency interviewed the Turkish economic actor, the Vice President of the International Business Forum, Ghazwan Al-Masry, and the economic expert Abdel Hafez Al-Sawy.

The impact of political factors on the Turkish lira

Vice President of the International Business Forum Ghazwan Al-Masry says: “Turkey is not a small country, its economy is among the twenty major industrialized countries in the world, and Turkey’s economy depends largely on small and medium industries and the service sector: tourism, aviation, construction and real estate.”

He added: “The Turkish currency also shows sensitivity towards external crises, especially crises with Washington in a number of files, and any tension in the relationship between Ankara and Washington leads to negative effects on the Turkish economy in general and the lira in particular. America is trying to arm Turkey by manipulating its economy and the lira.” However, Turkish-American relations, no matter how affected by these artificial crises, they do not last long because there is an international awareness of the role that Ankara plays in the security and stability of the entire region.

He continues: “Political factors have an important role in the stability of the Turkish currency. The more Turkey succeeds in its foreign political relations, maintains a stable domestic policy and introduces new strategic projects, this leads to the strength of its economy and the lira against foreign currencies.

And when there are elections in Turkey or a file to put pressure on Turkey, the credit rating agencies take on the roles entrusted to them, seizing the opportunity to lower Turkey’s credit rating, or put pressure on the Turkish currency in global markets, as Trump publicly stated to subjugate Turkey, and it has become certain that this will happen and repeat scenarios with each crisis.

Al-Masry continues: “The Turkish lira has been following the free exchange system since 2000, meaning that it is subject to the supply and demand market, as the fixed exchange rate of the lira was abandoned following the agreement with the International Monetary Fund after the economic crises that Turkey experienced at the end of the nineties.”

The most important obstacles to the Turkish economy

The economist, who is also a Turkish businessman, believes that the most important obstacles to the Turkish economy are “limited to short-term external debt (ie, hot money), and a deficit in the trade balance due to the energy bill that it imports from abroad, and thus is reflected on the current account.”

The beneficiaries and losers of the decline in the Turkish lira

With regard to the negatives and positives of the decline in the lira, the Egyptian confirms that the decline of the lira – like every currency of an industrial country – negatively affects some dealers, but the decline of the Turkish currency benefits other dealers.

According to the economist, the Turkish currency, despite its decline, is based on a solid and flexible economy that relies on small and medium industries and adapts to crisis policy. Every crisis creates opportunities, as there are parties who profit because of the currency’s decline.

He added: “Among these winners are exports and Turkish companies exporting abroad, and it helps activate export-oriented internal production, as the depreciation of the lira gives exporting companies greater competitiveness and an opportunity to sell goods at a better pace and boost Turkish exports abroad.

Foreign investments begin to flow into Turkey, because the depreciation of the lira motivates them to enter the Turkish market to seize investment opportunities at the lowest cost.

Tourism, which is an essential part of Turkey’s economy, benefits. The decline of the lira against hard currencies encourages tourism to Turkey at a lower cost and more competitiveness, and the government is also benefiting from these factors by reducing the trade deficit.”

Al-Masry continues: “As for some of the losers due to the decline of the Turkish lira, among them are companies imported from abroad, because they pay larger sums in foreign currency in exchange for importing goods and services, and consumers at home, because the decline of the lira leads to higher prices at home and then an increase in inflation rates, but Turkey is easing The severity of the losses by employing the sums obtained from the rise in the level of exports to absorb any price shock internally, while raising the salaries of employees by the amount of inflation every six months.

Companies that have obtained bank debts in hard currency are greatly affected by the depreciation of the currency, and foreign investors in the apartment sector, the value of their apartments fall against the foreign currency in the short term, and then compensate for this loss in the medium and long term.”

High inflation rate in Turkey

In addition, the Egyptian economic expert Abdel Hafez Al-Sawy, who resides in Istanbul, says: “The reason for the decline of the Turkish lira today with the end of transactions means that the psychological state of dealers in the market is a reaction to what happened yesterday from the decision of the Policy Committee of the Central Bank of Turkey to reduce the interest rate by 1%; As well as the statements made by President Erdogan about his intention to lower interest rates in the interest of investors.

And he adds in the same context: “As we know that the exchange rate and stock exchanges in general are very sensitive to dealing with political statements, especially if they are in the size of large personalities at the level of the President of the Republic, but of course the continued decline of the Turkish lira will be one of the reasons that will lead to the continuation of inflation at high rates. at 20%”.

The future of the Turkish lira

With regard to the future of the Turkish lira, the economist believes that the future of the Turkish lira, whether improvement or decline, is “related to the method of treatment that the Turkish government’s economic policy will follow in coordination with the Central Bank as an independent body that manages monetary policy, and therefore this matter will be determined during the coming period. It will be unclear.

But in the medium term, the economic policies that will be announced to address the effects resulting from inflation or the causes leading to inflation on the supply side or the demand side, will be clear in the medium and long terms. As for the short term, we are facing speculative fluctuations or if the central bank intervenes by pumping money to cool Exchange rate and currency appreciation.

But it seems that the central bank is not ready now to sacrifice more foreign exchange reserves in order to protect the exchange rate, but the speculative process may calm down within a week and the rates of the lira against the dollar will have some improvement, but this is just an expectation and reality will yield results. real.”

Is Turkey heading towards an economic crisis?

Reports indicated that Turkey is heading towards an economic crisis, and in response to what was circulated, Al-Sawy confirmed that the news was a kind of intimidation, saying: “We are facing many strong indicators of the Turkish economy, but this does not mean that the Turkish government does not care about addressing the exchange rate and exchange rate problems. interest and speculation on the currency; As well as the case of the social dimensions resulting from the high rate of inflation, the government must adopt a set of policies that lead to real treatments that are far from temporary painkillers.”

He continues: “But I do not expect that there will be an economic crisis in Turkey. There are problems that can be addressed and controlled if the right tools are put in place to deal with them.”

The impact of the fall of the Turkish lira on investors and commercial traffic

Al-Sawy says: “If we are talking about the impact of the fall of the lira on investors and the commercial movement in Turkey, we have to differentiate between two things, namely speculators and investors.

Speculators usually complain often about any decline in the exchange rate or high inflation rates, etc., and these have different judgments and descriptions from investors, because the speculator bets on the short term and not on the medium and long term, unlike the investor who always takes into account the changes in the The exchange rate or some other variables and places in its calculations within the calculation process the so-called “exchange rate volatility reserves”, for example, or the volatility reserve of imported or domestic inflation rates and other reasons that lead to setting up a set of reserves to secure the financial position of investor companies and so on.

But let us be realistic, in this atmosphere, there is a state of harm for investors, especially those who depend on some production requirements from abroad, because in this case the import bill for them increases, and thus the cost of production increases, and this is one of the reasons for the increase in the rate of inflation.”

 
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