jnj
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Karma: 0 |  | Finance issues
« Thread Started on Apr 23, 2006, 8:46pm » | ![[Quote]](http://s2.images.proboards.com/buttons/quote.gif "[Quote]") |
I asked other forums about devaluation of the lire nearly 6 weeks ago. Yesterday the following was submitted..
Mundell, a professor of economics at Columbia University, was speaking in Istanbul on the "Current Account Deficit and the Value of the Turkish Lira."
He said once the fight to lower inflation is over, a major adjustment in foreign currency rates was inevitable. A successful inflation policy heavily depended on an overvalued local currency, he said.
As in Canada between 1987 and 1992 and in Brazil in the 1990s, lowering inflation meant high current account deficits and a rise in unemployment, with an overvalued local currency.
“Turkey should not swap horses while crossing the river. But it can make some small adjustments. The central bank should intervene to avoid further overvaluation of the lira.”
I never got a complete answer, but honest opinions...can anyone advise me please if..as someone with money invested in YTL, I should be genuinely concerned enough to withdraw it. Cheers, john...sorry to bring an air of seriousness..but i honestly would appreciate advice 
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« Reply #1 on Apr 24, 2006, 1:41am » | |
You asked for it John!
At the risk of repeating a session from another forum (maybe even the same one), I don't think you need to panic but the financial analysts have been saying for some time now that there needs to be a currency adjustment. It just doesn't seem to have materialised. Most of the problem with this kind of speculation is that it often leads to action - almost regardlesss of any economic imperative.
I think the usual advice would be to spread your investment and make sure you aren't tied into your lira investment for too long right now. In the long run I see a solid future for the Turkish economy. Apart from anything else, it is beholden to the IMF and the kind of major reforms which that organisation demands of countries it loans to. In other words, it's locked into the big boys game and will not be able/allowed to stray too far. I don't see another Argentina here but what do I know?
One more strand to this essay. There have been rumblings about choosing the new head of the central bank, which is not inspiring confidence in the markets. If you look on the links section of the main site for 'Turkish news' and 'Turkish news 2', there are lots of stories just on Turkey, including finance. Also there's http://news.ft.com/cms/9c671af6-5c44-11da-af92-0000779e2340.htmls from the FT. You can sign up for a free trial to read the full report and I'll try and dig out some other stuff.
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jnj
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Karma: 0 | | Re: Finance issues
« Reply #3 on Apr 24, 2006, 9:56am » | |
Thank you, understood it all  I spent 30 years of my working life in primary schools, and learnt a great deal from little uns'. KISS being the main principle..keep it short and simple. Hence my reasoning powers like things explained simply!!! At first I started to genuinely worry, because, for right or wrong, I have committed quite a few pennies into YTL until October. If the lire devalues, my pennies will be worth less...but then I thought (KS2 SATs) if I keep in it lire, then although it will be worth less compared to the pound, it will still be the same amount in lire. Hence when I end up buying that plot of land etc, if my brain thinks YTL not BP, then in real terms I haven't lost out.
If you're still following this ...well done Thank you
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« Reply #4 on Apr 24, 2006, 11:52am » | |
Also, other forums (primarily on financial matters) like askaboutmoney.com can be good places to gauge opinion- you might recognise me in there too - but as I'm sure you know jnj, it is only opinion. I wouldn't want anyone to base important financial decisions on hearsay, no matter how compelling it was.
That leaves us with with the professional advice option - cans of worms!
Matt
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« Reply #5 on May 15, 2006, 11:59am » | |
Looks as if the Lira is on the way down but can't find out how far people reckon it might go -it was YTL2.63 - £1.00 last time I looked. Anyone got any info?
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