It has depreciated by 25% during the year, and has depreciated by nearly 20% since the beginning of September, and continues to break through historical lows – this is the recent performance of Turkey’s local currency, the lira.
The lira has become one of the worst-performing currencies in emerging markets this year.
The plummeting lira in Turkey has been accompanied by hyperinflation and ultra-high unemployment.
When currently exporting to Türkiye, be sure to pay attention to the security of your payment!
The Turkish lira hits new lows again and again
Currently, the Turkish lira’s exchange rate against the U.S. dollar has broken through the 10 mark, setting a record low.
Since the beginning of this year, the Turkish lira has depreciated by more than 25%, making it the most depreciated currency among emerging economies. The lira has even lost two-thirds of its value in the past five years. Over the years, the lira’s depreciation has been described as “textbook style”, with the lira depreciating by more than 10% every year for eight consecutive years.
The monetary policy of the Turkish Central Bank this year has caused the lira exchange rate to accelerate depreciation in the past two months.
Lira exchange rate trend:
We all know that when a country’s currency depreciates, it is good for exports but not good for imports, and the cost of imports will increase accordingly. increases with the extent of currency depreciation. Think about it, among those Turkish importers who placed orders in September for delivery in November, who is willing to bear such exchange losses?
In addition, Turkish people who felt that “money is worth less every day” began to “vote with money” and frantically purchased foreign exchange to protect themselves from the effects of currency depreciation and increasingly rampant inflation. According to data from the Central Bank of Turkey, as of October 1, foreign exchange deposits held by local residents totaled US$232.7 billion, an increase of 20% from the beginning of 2020.
As the Turkish lira continues to fall, the Turkish Ministry of Finance has introduced new regulations requiring currency exchangers to register the identities of their customers. Previously, only customers with transaction amounts of more than US$3,000 were required to submit personal information. information.
The economy has been hit hard
Let me talk about a concept first: major economies set 2% CPI as a reasonable level. If it exceeds 3%, prices will be out of control. If the risk exceeds 5%, it is considered hyperinflation.
In October 2019, Turkey’s CPI was 8.55%, and in January 2021 it was 14.97%. By October this year, the CPI had climbed to 19.89%.
Affected by inflation, prices in Turkey have risen sharply since this year. The prices of commodities closely related to people’s livelihood, such as food, transportation, housing prices, etc., have increased even more, and the prices of imported commodities have continued to rise.
In October, the prices of food and non-alcoholic beverages increased the most, reaching 27.41%, followed by hotels, cafes and restaurants at 25.53%, and furniture and household equipment at 23.03%.
According to Turkish official data, the epidemic doubled the number of poor households from 2019 to 2020, reaching 6.63 million.
In the first eight months of this year, more than 60,000 companies went bankrupt in Turkey. The current unemployment rate in Turkey is above 10%, and the youth unemployment rate has risen to 22%.
Customs are weird, beware of trade scams
Executive foreign traders may have heard of a classic scam called the “Turkish Scam”. This is because of the “weird regulations” of Turkish Customs:
Before the ship arrives at the Turkish port, the freight forwarder needs to register the goods in the name of the consignee. If there are any changes in the future, it is necessary to obtain the name of the original consignee. Written consent.
The direct result of such a provision is that the ownership has been transferred to the consignee before the goods are actually delivered, regardless of whether the consignee has completed its obligations in the trade contract.
After the goods arrive at the port, the importer should complete the delivery procedures within 45 days, otherwise the goods will be confiscated and auctioned.
After the 45 days expires, the consignee (buyer) has two opportunities to apply for an extension, each time for 30 days, and does not need to submit a reason for the extension. After that, the consignee still has an opportunity to apply for a 30-day extension to pick up the goods, but he needs to explain the reason for the delay to the customs.
Therefore, with the cooperation of the consignee, the goods will usually not enter the auction process within 135 days after arrival at the port, but the costs of demurrage, warehousing and other costs incurred during this period are unavoidable.
For goods that have been stranded at the port for a long time or are not picked up by anyone, the customs will treat them as having no owner and have the right to auction the goods. At this time, the original importer will be the first purchaser.
This creates conditions for scammers to cheat.
The scammer will first register a short-selling company in Turkey, and the company will come forward to defraud the goods exported from China to Turkish Customs, deliberately delaying the time, leading to the final customs auction, and then buy it at a very low price, and then Sell it at a high price and divide the spoils.
Especially under the current situation where Turkey’s exchange rate has plummeted and the economy is facing high risks, importers are likely to take advantage of this loophole to trick suppliers due to cost pressures. Therefore, please ship to Turkey. Be sure to pay attention to the security of your payment! </p
