Robin Brooks, Chief Economist of the Institute of International Finance (IIF), described the recent comments about the Turkish lira as “chatter” and said, “Some say the dollar/TL can go forever. Don’t take any of this into account, it’s all nonsense. In this context, there is no sign of panic dollarization. In the 13-week moving average, flows to foreign currency deposits are flat.”
Brooks, in his social media account on the medium and long-term debt rollover ratios of Turkish banks and companies, said: “The recent depreciation of the Turkish lira has raised questions about the financial stability risk in Turkey. We would like to emphasize that Turkey’s financial and private sector has successfully recovered from the sudden stop in August 2018, which is a bigger shock than what is currently experienced. Companies in Turkey circumvented this with reasonable replacement rates. Now they will do it again.”
Brooks, who also shared the comments made in the face of the activity in the dollar / TL, said:
“Right now, there are all kinds of panic chatter about the Turkish lira. Some even say that the dollar/TL can go forever. Ignore any of this, it’s all nonsense. In this context, there is no sign of panic dollarization. In the 13-week moving average, flows to foreign currency deposits are flat.”
Brooks stated that there were situations in Turkey where excessive credit growth, especially in 2018 and 2020, widened the current account deficit and caused the Turkish lira to fall. “This is different. Markets are complacent and have received a warning signal. It’s a repricing and a much smaller shock than in 2018 or 2020.”
Sourcef: Sabah / Translated by Irem Yildiz