MARKETS WILL HEAR THE TERM ‘CRITICAL DECISION’ OFTEN
Mehmet Şimşek, Deputy Prime Minister of Turkey, stated that the global economy was facing significant uncertainties, and that the markets were in disarray in his speech at the 46th Ordinary General Meeting of Turkish Industry & Business Association (TUSIAD). Assoc. Prof. Dr. Coşkun Küçüközmen, Lecturer at IUE Department of International Trade and Finance and Director of EKOLIDER (Leadership and Governance Centre), indicated that the markets would come across with ‘critical decision’ and similar terms often in the coming days. He said that the determining variables in Turkey would be the topics on relations with Russia, Syria, and terrorism.
“The major uncertainties in dollar and other currencies have significant effect not only on money and capital markets but on trade as well. Prices are sticky upward especially in commodities dependent on foreign currency,” said Assoc. Prof. Dr. Küçüközmen.
Assoc. Prof. Dr. Küçüközmen stated that even though there was more than half decline in oil prices worldwide, price decline in petroleum and its derivatives in Turkey was considered chicken feed. He said that trying to explain this by increase in exchange rates or refined cost was unsatisfactory.
Countries subject to foreign exchange risk and with dollar debt were directly affected by the decisions of the Federal Reserve System (FED), and there were rapid outbursts in these markets, said Assoc. Prof. Dr. Küçüközmen. He said that there would not be any outbursts in Turkey by Fed decisions, that the real determining parameters would be Russia, Syria, and terrorism. Küçüközmen said, “Our relations with our trade partners and their economic strength are far more important than the FED decisions. Our priority should be trading and collaborating with Iran.”
‘Reliable Financial Tool Missing’
Real estate market, which is one of the main reasons of global financial crisis in USA, was on top of the list again said Assoc. Prof. Dr. Küçüközmen and he stated the following:
“Our country also has joined this caravan. House prices are determined almost daily. Of course, the most important factor is seeking for high income and lack of reliable financial tool. Decline in oil prices had a negative impact on many countries, OPEC countries in particular. Countries like Russia, Venezuela, and Nigeria found themselves in a bind when their currency depreciated considerably against the US dollar in addition to decline in oil prices. Reduction in China’s import negatively affected almost 10 countries which are doing more than 35% of their foreign trade with China. China, who is also going to be included in ‘The Special Drawing Right (SDR)’, a reputable currency basket of IMF’s as of November 2016, consolidated actual currency war by devaluating Yuan many times back to back. It would be a major mistake to see risks independent of each other in an environment where many risk factors trigger each other. Especially, political risk–based progresses can trigger currency, price, credit risk in a short period of time.”
