Robin Brooks, the former Chief Currency Strategist and Senior Economist of the US-based investment bank Goldman Sachs, said in a statement on his twitter address that foreign investors can display a cynical attitude on the subject, referring to the dollar/TL, which lost value rapidly after the election.
While the interest of foreign investors in Turkey is expected to increase with the new economy management, the experienced foreign exchange expert emphasized that foreigners can permanently attract their investments from Turkey. Pointing out that the level of 21, which they see as a fair value in the dollar/TL parity, was rapidly exceeded after the elections, Brooks commented, “Foreign investors may consider this situation extremely cynical and permanently remove Turkey from their portfolios.”
After the 1 dollar remained below 21.00 TL against the Turkish lira for a long time, the dollar/TL rate quickly exceeded this threshold after the Turkish elections on 28 May. Foreign investors may consider this situation extremely cynical and permanently remove Turkey from their portfolios.
Robin Brooks
Former Chief Currency Strategist at Goldman Sachs
“Three Fundamental Problems Await the New Economy Management”
Brooks, who also shared his thoughts on the difficulties faced by the new economy administration on his Twitter address, pointed to 2 main problems.
Underlining that the thought that the dollar/TL was under too much pressure before the election, it could create a negative pressure on the TL after the economic management changed, Brooks drew attention to the sudden depreciation in the TL and warned the authorities.
Secondly, he said that the question mark and fear created by the dismissal of Naci Ağbal from the CBRT in March 2021 still exist, and that this may continue to apply to the new economy management. He pointed out that the possibility of an event such as the dismissal of Naci Ağbal for the new economy management to happen quickly and suddenly arouses suspicion in the markets.
The challenges for Turkey’s new economy team are: (i) Markets feel that the Turkish lira has been artificially valued prior to the election, so the dollar/TL is expected to rise to much higher levels with the accumulating depreciation pressure; (ii) After Naci Ağbal’s dismissal from the Central Bank in March 2021, many are skeptical of the continuity of the new economy team.
Robin Brooks
Former Chief Currency Strategist at Goldman Sachs
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