Analysts put this down to unrest in the Middle East, which affects Turkey"s trading relations and also an expected interest rate cut by the Turkish Central Bank. Considering that the Turkish economy has been performing fantastically well since the currency crash of Feb 2001, this is an unexpected weakening of the Lira against hard currencies. Prior to 2001, Turkish Lira was pegged against USD and artificially sustained against it. In February 2001, the Lira was allowed to free-float amidst hightening economic pressures, hence a revaluation took place, which resulted in the Lira crashing against hard currencies by 45% overnight.
This was a wake up call to Turkish Central Bank and economy in general. In the proceeding years, political regime changed to AK Party, which has successfully implemented tight fiscal and monetary policies resulting in a well balanced Turkish Lira and ever improving economic performance; inflation was brought down from around 80% to under 8% last quarter of 2010, Central Bank interest rates have been steadily reducing to 6.5% in January 2011 from above 17% only 8 years prior, a promising mortgage system is now in place.
All indicators are exceptionally favourable.
Analysts expect Turkish Lira to recover shortly for there are no substantial underlying reasons for a weak currency.
This is a perfect opportunity for GBP, USD based and European buyers to purchase property in Turkey, as most sellers calculate their net prices in Turkish Lira.
Compared to last quarter of 2010, GBP is now 10% stronger than Turkish Lira. So now the GBP now buys 10% more TL
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