Turkish exporters demand dual exchange rate system, push for 40 to dollar minimum

Turkish exporters demand dual exchange rate system, push for 40 to dollar minimum
Cereals exporter Tayci is demanding a dual exchange rate system that will help companies deal with ballooining costs.
By Akin Nazli in Belgrade April 6, 2024

Kazim Tayci, head of Istanbul Cereals Pulses Oil Seeds and Product Exporters' Association (IHBIR), has called on the Turkish government to introduce a dual exchange rate system, Reuters reported on April 5.

As things stand, Turkish exporters are obliged to sell 40% of their FX revenues to the central bank.

The dual exchange rate system would help exporters deal with "ballooning costs" and international competition by letting them sell their dollars to the central bank at a better price, according to Tayci.

Tayci is demanding a dual USD/TRY exchange rate of at at least TRY 40.00.

Since last month, Turkey's Erdogan administration has returned to its straight-line USD/TRY rate policy. It has drawn a line around the 32-level this time around.

“The current exchange rate is far behind inflation,” Tayci also told reporters late on April 4.

On April 3, the Turkish Statistical Institute (TUIK, or TurkStat) said that Turkey’s consumer price index (CPI) inflation officially stood at 69% y/y in March.

On April 5, the USD/TRY was up 66% y/y to 32.

The Istanbul-based ENAG inflation research group of economists, meanwhile, has calculated a Turkish inflation figure of 125% y/y for March.

Currently, all stakeholders in Turkey’s economy are awaiting a post-local elections lira devaluation, while the Erdogan regime has been circulating information that the central bank is buying (not selling) dollars in the market.

Tweeted views: If it is not the Erdogan regime that is drawing a straight-line on the USD/TRY chart, then who is behind it?

Public relations and techniques amounting to manipulation can be deployed, i.e. circulating information that is the exact opposite of what you are actually doing or creating confusion about the perpetrator.

But it obviously does not work.