HOLIDAYMAKERS coming to Turkey will be in for a boom time with the currency – after the Lira hit the magical 4TL to the pound this week.
It means tourists can now buy the Lira at around 3.95-3.97 TL to the pound in Turkey ensuring that their money while on holiday goes a little bit further than normal.
However, while the Lira rides high, traders are more than likely to hitch their prices up to match the rate!
Conversely, a lot of British whose money is invested in Turkish have seen their capital piles seriously reduced in the last week.
If you had invested 100,000TL when the rate was 3.85, the conversion back to pounds would be £25,970. A conversion rate back at 4TL to the pound would be £25,000.
While that is a simplistic conversion, most expats would have changed back their pounds to Turkish Lira when the Lira was hovering around 2.8 TL to pound. On a conversion base of 2.8TL, the investment then would have been about £35,000.
Today’s lira is being pressured by the possibility of the US Federal Reserve raising rates and domestic jitters over the coherency of Turkish economic policy under President Recep Tayyip Erdogan.
Markets have been spooked by fears that Deputy Prime Minister Ali Babacan could be jettisoned from the cabinet after the June 7 legislative elections.
The Turkish Central Bank on April 14 took the hugely unusual step of publishing the agenda of its next monetary policy meeting on April 22 which will include measures to support the lira, including a cut in foreign exchange deposit lending rates.
This announcement initially helped support the lira on Tuesday but these gains were wiped out in early trading Wednesday.
The lira has lost almost 16 percent in value over the last three months against the dollar, in a major worry for the government ahead of the polls.
“Given the political uncertainties regarding the outcome of the elections, we think that the Turkish lira will remain weak and trade in a range of 2.60-2.80” to the dollar, said Özgur Altuğ at BGC Partners in Istanbul.
He assumes the central bank would “intervene gradually by tightening Turkish lira liquidity to stop further bleeding.”