Barons lying in ambush to hike interest - ERDAL TANAS KARAGÖL

Barons lying in ambush to hike interest

Is so much fluctuation in the foreign exchange rate normal? Is this fluctuation caused by the overall state of the economy? Frankly, the re-appreciation of the Turkish lira with a sudden reaction after such severe activity in foreign exchange and the devaluation of the Turkish lira, cannot be explained through economic indicators or economic reaction.

It is obvious there is intentional speculation – or rather manipulation.

So, who are these manipulators and what is their objective?

There are numerous reasons for this manipulation, but the actual reason is the demands for an interest hike. A high interest environment provides an opportunity for many foreign banks, financial institutes and of course credit rating agencies to make great gains. Unfortunately, in this system, luck is always on the side of this segment.

However, in the new period, there is a pursuit in Turkey for a new system to turn this luck.

It is because of this pursuit that a rough fight is taking place. On one side of the fight is the financial institutions that have become used to the Central Bank administration's high interest rates in the past and that made great gains as a result, while on the other side there are those who support production and are trying to stop this income through low interest rates.

Of course, President Recep Tayyip Erdoğan's years-long valid struggle for low interest, should be particularly stressed.

A numeric comparison of the interest payments caused by high interest will help in better understanding this struggle. Such that, while the share of Turkey's interest payments in the gross domestic product (GDP) was 15 percent in 2002, the same rate is currently at 3 percent. In other words, interest payments decreased fivefold.

Surely, this segment, which has become used making money from money without taking any risks for years, losing its lucrative interest income, is annoying interest brokers. It is obvious that they cannot tolerate losing such a profitable and continuous interest income and hence, the system change. This is why they are not stopping.

Well, what are they doing?

Are we experiencing deja vu?

Let us remember that on Jan. 29, 2014, in the post-Dec. 17 and Dec. 25 coup attempt atmosphere, similar to now, there was intense speculation – as a matter of fact, manipulation – both within and outside for the Central Bank to hike the interest rate.

I say manipulation, because the Central Bank's Monetary Policy Committee (MPC) at the time could no longer endure these manipulative pressures and had raised the policy interest from 4.5 percent to 10 percent.

Certain circles that frequently repeat such manipulations are following the same strategy again. Their aim ahead of the Central Bank MPC meeting that is planned to gather on Jan. 24, is, just like on Jan. 29, 2014, to push for an interest hike and as a matter of fact, they are trying to create intense pressure in foreign exchange for an extremely high rise in interest rates.

It's complete deja vu. We are experiencing the same things again.

Meanwhile, we are in a period which, if the MPC does not decide on an interest hike following the meeting, the “Credit rating agency Fitch will downgrade on Jan. 27” threat is voiced. We understand the negative and double-standard decisions made against Turkey by credit rating agencies such as Standard & Poor's (S&P) and Moody's.

However, Fitch is an agency with which Turkey has made an agreement as a country and that currently also officially determines Turkey's credit rating. We expect that Fitch will not join this black propaganda and perception operation.

Yet, it is clear as day that credit rating agencies, the banks they are in cooperation with and their intermediaries act jointly in this perception operation.

They are continuing their old habits

Finance institutions are continuing their old habits concerning Turkey like nothing has changed. In fact, they do not want the financial system under their domination to change and they are attacking. And they have no concern at all.

The real issue is that whenever Turkey focuses on structural problems, begins working on major projects and, like today, starts a process of constitutional changes that will shape the country's future, a much different process begins.

The aim is to change Turkey's focal point.

A shift in Turkey's economic and political focus is important not only for us, but also the political and economic stability of the region. Standing against all kinds of manipulation attempts with this fact in mind is more critical than ever.


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