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Rafiki. You're right the Pound is weak generally, but you're wrong to suggest the Lira only looks strong because the Pound looks weak-recently the Lira is strong against all currencies, including the Euro, and strong against a resurgent US Dollar, the strongest of the big currencies the last couple of weeks.

In fact the whole point of this thread is "STRONG LIRA 2.2 " was started when the Lira was making new highs at 2.2 several months ago- and has now made new highs again at 2.11 .... because the Lira is benefitting from structural reform that is resulting in a mid term or dare I say potentially long term upward trend. This is the underlying rationale for investment in Turkish assets- direct investment, equities, bonds, real estate- all benefit - structural reform reduces volatility and increases asset valuations - reduces risks and risk premiums- resulting in lower interest rates - and higher asset values.

Of course none of this makes any sense unless you observe within historical context- what may appear to be very high interest rates in YTL at 19% are very low in comparison to where they were for over a decade- above 19% - even as high as 200%.

The long term trend in interst rates is down, and the long term trend in the YTL looks to be upward- the recent surge has put the Lira to the top end of its range again - and at this level one would imagine the Central Bank would naturally cut interest rates again - providing further impetus for an increase i n asset values. Only a rapidly growing economy that is sucking imports resulting in a burgeoning trade deficit is keeping policy makers on this course of high interest rates.

This is no cause for complaint- get it while you can- if you had bought YTL 90 days ago you would now be sitting on a 15% currency gain and 19% in deposit interest - on target for a total return of near 35% - for a simple deposit account investment. If you own Turkish property, there is a strong case for releasing equity with a mortgage, say in Yen at 5%, and investing in the deposits- had you done so in May YOU WOULD BE ON COURSE FOR THE 35% GAIN and still own the underlying real estate asset - just for the cost of 5% in interest- a net gain of 30%???.

Thats one way of putting your money to work.

Welcome to Turkey!

Look back through this thread for FX charts on the Lira.

6th September 2008, 01:25	#91
Darren Senior Member	Re: Strong Lira 2.2 YTL -£ Rafiki. You're right the Pound is weak generally, but you're wrong to suggest the Lira only looks strong because the Pound looks weak-recently the Lira is strong against all currencies, including the Euro, and strong against a resurgent US Dollar, the strongest of the big currencies the last couple of weeks. In fact the whole point of this thread is "STRONG LIRA 2.2 " was started when the Lira was making new highs at 2.2 several months ago- and has now made new highs again at 2.11 .... because the Lira is benefitting from structural reform that is resulting in a mid term or dare I say potentially long term upward trend. This is the underlying rationale for investment in Turkish assets- direct investment, equities, bonds, real estate- all benefit - structural reform reduces volatility and increases asset valuations - reduces risks and risk premiums- resulting in lower interest rates - and higher asset values. Of course none of this makes any sense unless you observe within historical context- what may appear to be very high interest rates in YTL at 19% are very low in comparison to where they were for over a decade- above 19% - even as high as 200%. The long term trend in interst rates is down, and the long term trend in the YTL looks to be upward- the recent surge has put the Lira to the top end of its range again - and at this level one would imagine the Central Bank would naturally cut interest rates again - providing further impetus for an increase i n asset values. Only a rapidly growing economy that is sucking imports resulting in a burgeoning trade deficit is keeping policy makers on this course of high interest rates. This is no cause for complaint- get it while you can- if you had bought YTL 90 days ago you would now be sitting on a 15% currency gain and 19% in deposit interest - on target for a total return of near 35% - for a simple deposit account investment. If you own Turkish property, there is a strong case for releasing equity with a mortgage, say in Yen at 5%, and investing in the deposits- had you done so in May YOU WOULD BE ON COURSE FOR THE 35% GAIN and still own the underlying real estate asset - just for the cost of 5% in interest- a net gain of 30%???. Thats one way of putting your money to work. Welcome to Turkey! Look back through this thread for FX charts on the Lira.