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North Cyprus News | Turkish Lira Weakens

North Cyprus News – Turkish Lira Weakens

Several months ago analysts were predicting that the Turkish lira would fall to 3.50TL/£1 but the current crisis concerning family members of Turkish Ministers being involved in a corruption probe concerning public tenders, had not been factored into this analysis.

In north Cyprus, Prime Minister Ozkan Yorgancioglu said that price hikes in petrol and cylinder gas were directly related to the weakness of the lira and, in the case of cylinder gas, were under the control of 3 firms. “The price hike in petrol is tied to world markets and they are done periodically every 15 days”, Yorgancioglu said.

While some ex-pats rush out and buy goods to avoid a price rise, if they are changing Sterling to Turkish lira to do this, then waiting a month and taking advantage of an even weaker lira would mean that the price in pounds would probably be the same. Those with savings in Turkish lira accounts are in a dreadful situation, wondering whether to convert back to Sterling. For example doing this a few months ago rather than now would have saved them a 10% loss.

My feeling is that if the crisis in Turkey is allowed to develop into a court case, and Turkish PM Erdogan’s government is weakened, then expect at least 3.60TL/£1 next year. There have been temporary 1-2% improvements in the currency during its fall but so far the trend has been towards £3.50/£1. I can’t see anything to stop this but the pound is currently strong on expectations of a Central Bank interest rate hike, better than expected employment figures and a house price bubble. Be aware, this could burst at any moment.

 

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