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Turkish Lira against US Dollar.. Facts and Expectations

Turkish Lira against US Dollar.. Facts and Expectations

Over the past two years, Turkish Lira has been a prominent topic in Turkish affairs. No wonder, because the exchange rate of Turkish Lira against US dollar is constantly fluctuating.

In fact, this is in the interest of foreign investors, but the fears and concerns for foreigners who want to invest their money in Turkey is continuing.

The gains are great, also the worries. To understand this better, we will take an example of buying real estate in Turkey. The house, which was priced at $100,000, was worth 300,000 TL when the exchange rate was 1$ = 3 TL. Today, the same house is worth 600,000 TL where 1$ ≈ 6 TL, so the house is cheaper if it is valued in USD, as is the case for large establishments and lands.

Thus, foreign investors are the primary beneficiary of the appreciation of USD against Turkish Lira.

 

*A graph describing Turkish economy against different countries from 2002 to 2019.

The exchange rate of Turkish Lira has been stable since 2016 until the first quarter of 2018, and the increase is the natural increase compatible with inflation except for some exceptions that accompanied the political events such as the failed military coup and the bombings at the end of 2016.

But after the first quarter of 2018 we see the rise in the exchange rate very sharply because of the political differences between Turkey and America and the issue of the priest that was arrested at the time, to improve again after the release of the American priest.

A resurgence in 2019 is due to the local elections in Turkey and the decision to re-election in Istanbul, Turkey's first financial city.

Finally, at the end of May, Turkish Lira is improving again, due to the improvement in political relations between America and Turkey.

Looking quickly to what we wrote, we note that the exchange rate of Turkish Lira against USD is fully related to the internal and external political situations, and it doesn’t matter to the foreign investor as much as whether it is a reliable economy to make gains from investments or not.

It is clear that 2017 and 2018 were good for Turkish economy, especially after the threats and the great difference in the exchange rate of Turkish Lira against USD. We conclude that the difference in the price of Turkish Lira doesn't indicate the status of Turkish economy for foreigners.

We cannot deny that the high exchange rate of Dollar against Lira affects the livelihood of Turkish citizens, but for foreign investor this rise has a positive effect.

Eresin Project