Calls for govt action as the TL plummets

Taken from this week's issue

 

The TL was trading at just over 10TL to the British pound following the outbreak of fighting between Azerbaijan and Armenia plus the threat of sanctions from the EU over Turkey’s drilling in the Eastern Mediterranean. The euro is trading at around 9TL, while the US dollar is now worth roughly 7.7TL.

Cyprus Turkish Chamber of Commerce president Turgay Deniz told Cyprus Today last night that the monetary situation was a “crisis” for North Cyprus because property prices, rents, university fees and the prices of many imported goods are based on foreign currency.

“The fall in value of the Turkish lira is due to regional conflicts, which have caused concern to investors,” he said. 

“Because the TRNC is using the same currency as Turkey, it has a knock-on effect on our economy.

“The devaluation of the Turkish lira against foreign currency, coupled with the lack of tourists and foreign students arising from the pandemic, will put many businesses under a lot of financial difficulties which need to be minimised through measures.

“We are currently working on a package of measures that we will announce in a press conference following the presidential elections, but anything we do now could be taken as being political and we wish to avoid this.

“The crisis needs to be managed. It will have a domino effect and we need to protect businesses and the public, whose buying power will be weakened.” 

Consumer Rights Association head Hasan Yılmaz Işık called on the government to “devote time to taking measures to protect consumers”.

He said: “The government needs to pass a new decree that pegs the currency rate of the Turkish lira to a set figure for rent, schools and universities. 

“We are receiving complaints that even university students in Turkey who have been granted scholarships [to study in the TRNC] don’t want to come because [university fees] are in foreign currency. They are opting to study at universities in Turkey instead.

“The cost of electricity – which is connected to the cost of fuel oil that is used for the main power plant in Teknecik – will undoubtedly go up.

“We are concerned that shops and retailers will use the devaluation [of the Turkish lira] as an opportunity to introduce extreme price hikes to certain imported goods. The Department of Trade is understaffed. Something needs to be done to prevent this from happening . . . otherwise we could see the prices going up as much as 40 per cent on certain products.”

Mr Işık also said that tax on rental income and customs duties should be cut.

Creditwest Bank expat branch manager Figen Kaymak told Cyprus Today: “My view is that the markets have become unsettled due to the regional conflict, the Eastern Mediterranean tensions and the Covid-19 pandemic. 

“The cost of living has already gone up due to the devaluing lira, and goods will become more expensive.

 “However, when things have settled down the TL will recover and investors will return to Turkey, strengthening the TL.”

Ms Kaymak said that the TRNC Central Bank interest rate was increased from 6.75 to 8.25 per cent this week meaning that, in the short-term, people with savings in Turkish lira will receive a better return.

“To help businesses, the government has said it will hand out 200,000TL [per business] with the repayments being deferred for a year to help them during the pandemic,” she added.

“Larger businesses are able to borrow up to 15 million TL from the state during this period.”

Cyprus Turkish Travel Agents’ Union head Orhan Tolun said North Cyprus was “undergoing a very difficult economic period”. 

“We do not have tourism, which was a major source of income to this country, bringing in foreign currency,” he said.

“This is why it is important for the government to find ways of making it easier for tourists to come here while also taking measures that best protect us from Covid-19.”