2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
The exchange rate of any national currency is of interest not only to exchange trading specialists, but also to ordinary consumers, especially when it comes to its connection with the US dollar. The lira is not pegged to the dollar and has a floating exchange rate, which tends to fluctuate frequently and sometimes significantly.
Politics as a significant factor in changing the exchange rate
Asking the question - what determines the exchange rate of the lira against the dollar, it is important to understand that Turkey is consistently considered one of the most economically developed countries in the Eastern Mediterranean, and in the Middle East it can compete even with Israel, with which it has long-standing and close, but not the simplest relationship.
Therefore, speaking about the exchange rate, one should not be limited only to the economy, because fluctuations in exchange rates are most directly related to the political life of the country, and in Turkey it is very diverse and complex.
During the twentieth century, a variety of political events took place in the country: coups, coups, revolutions and colonial wars. And each such major event affected the exchange rate of the lira against the dollar. Very often, the lira collapsed in the most sad way, and the country's economy reacted toit's not very good. On average, over the past two years, 1 dollar was worth 3.5 liras, and according to analysts, its decline will continue in the near future.
Currently, Turkey is largely focused on exports and the depreciation of the national currency in some cases can have a positive impact on production growth. In addition, the demand for goods produced in the country also has a significant impact on fluctuations in the Turkish currency.
Once great Turkey: lira to dollar exchange rate
Since the 1980s, when Turkey set out to open its economy to world financial capital, the United States has had a significant influence on the course of reform. At the same time, local authorities managed to create the most comfortable conditions for the development of small businesses, family businesses and medium-sized enterprises. The lira against the dollar during that period was incredibly stable, and the country's export potential was realized in the best possible way.
Small businesses increased the well-being of families and they, in turn, began to invest money in the economy. Real estate has long been regarded as the main investment vehicle in Turkey, the market for which has grown at an amazing rate for almost thirty years and has become, as a result, the second most important for the Turkish economy.
Light industry and no speculation
Enterprises, including family ones, created during a period of rapid economic growth and rapid accumulation of capital, grew quite rapidly andhave become influential players in the global market. The way the lira treated the dollar was a serious confirmation of this.
The haberdashery and knitwear industry still attracts foreign buyers to Istanbul, as local goods have earned a reputation for quality and safety compared to competitors from Southeast Asia. However, with such success in various areas of industrial production, Turkey has not managed to achieve any significant place in the international financial market.
Dependence on Western corporations
Turkish capital remained largely dependent on Western funds, which drew money for housing construction, the construction of huge exhibition centers and shopping malls.
At the same time, loans, although they were given to Turkey at a relatively small percentage, require a return in foreign currency, which, as mentioned above, is highly dependent on the political situation. That is why it is so important to understand how the lira relates to the dollar.
Such a strong link with European and American financiers could jeopardize Turkey's ongoing turn towards full independence, primarily from the European Community. However, this will affect the well-being of families involved in medium-sized businesses in the most minimal way.
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