What is behind the FX trade?
Fatih Özatay, PhD
20 September 2010
I started to a series on exchange rate; but it was interrupted by growth figures and the recent decision on interest rate. A meeting by exporters and the CBRT (Central Bank of the Republic of Turkey) and recommendation of raising FX reserves to $100 billion are on the agenda. These are closely related with the series I am writing, so I will continue from where I stopped. Let me first summarize the first commentary of the series.
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Should not we first read what we tend to interpret?
Fatih Özatay, PhD
19 September 2010
The recent interest rate decision was generally misinterpreted. It was said that the CBRT (Central Bank of Republic of Turkey) cut interest rates and comments that might damage the prestige of the Bank was made. However the CBRT did not change the policy interest rate. False and wrong comments were made upon the CBRT's cutting bank borrowing rate.
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Do you watch the tea party days in America?
Güven Sak, PhD
18 September 2010
It is Tea Party time in America. They started with house meetings. It was right the beginning of the economic crisis. They had complaints. They were afraid. Now they are bringing down candidates of the Republicans one after another. It appears that the Tea party movement has intervened in the course of events in the United States of America. It is like the public decided to determine their future on their own. The attitude shows it. Their appearance on the media also reflects this idea. Their web site is titled Tea Party Patriots; sort of a 'Kuva-yi Milliye' (national forces). If you wonder what is going on in the USA, please join me down in this free-association commentary.
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First half of the year is OK; what about the second half?
Fatih Özatay, PhD
16 September 2010
Two important figures were recently announced: GDP in the second quarter of the year and unemployment rate for June. Let me start with emphasizing two favorable developments with respect to the GDP. First, GDP net of seasonal and calendar effect increased by 3.7% quarter-on-quarter. This is a significant increase. Second, this impressive quarter-on-quarter growth rate enabled GDP to surpass the pre-crisis level, which was achieved in the first quarter of 2008.
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Hike in policy uncertainty is not good for growth, either
Güven Sak, PhD
16 September 2010
Let me continue from where I stopped last Monday: In the post-referendum Turkey, risk of political uncertainty decreased while that of policy uncertainty increased. It is sort of a 'What the hell is this now' situation. I believe the growth figures announced the day before should be considered with this lens. Today, let us combine these two.
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Meaningless fuss
Fatih Özatay, PhD
14 September 2010
It is exporters in general who mention a certain level for exchange rate. This is 'understandable' considering only the exports. After all, exchange rate affects the profitability of exporters. Lower the exchange rate, lower the profits.
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What does the referendum results imply for the economy?
Güven Sak, PhD
14 September 2010
The referendum following the Ramadan Festival brought about a strong 'yes'. In my consideration, voters stated that they are satisfied with the conditions in general. The government restored trust with the referendum. How and why this result came out is another matter of question. Let us see today what the referendum results imply for the economy.
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Do those who talk through their hat know?
Fatih Özatay, PhD
12 September 2010
Let me begin with a quotation from an academic research published in 1995: "There is remarkably little evidence that macroeconomic variables have consistent strong effects on floating exchange rates, except during extraordinary circumstances such as hyperinflations. Such negative findings have led the profession to a certain degree of pessimism vis-à-vis exchange rate research."
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The crisis hits the ballot box
Güven Sak, PhD
07 September 2010
Do you follow the election campaigns? Turkey is now surrounded with the election atmosphere. Do not get tricked that it is the referendum that will be carried out and it is glamorized with a number of issues; an election is an election. The citizens of this country feel free and at liberty only in front of the ballot box since 1950's. When you are in front of the box, it is your satisfaction with your life that determines the outcome. If you are satisfied, you vote yes and vice versa. If you are hopeful that everything will be all right, you vote yes. If you are not you vote no. In this context, I believe that the crisis hits the ballot box either in Turkey or in other parts of the world. Please note that this is what happened also during the previous local elections. Please give an ear to
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Inertia of economic policy
Fatih Özatay, PhD
06 September 2010
If you are of belief that the market mechanism should not be intervened in and that the economy will reach the equilibrium in its own dynamics, you do not have to worry about the recent negative signals about economic growth. But we cannot say the opposite.
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