Ciudadanos prepares for the rise of the dollar

The expectation of an increase in the dollar/TL exchange rate after the elections led to notable increases in card payments.

According to data from the Central Bank (CBRT), as of the week of March 31, expenses made with credit and debit cards increased by 146 percent compared to the same week of the previous year and reached 125.2 thousand million TL.

Expenses in the auto parts, sales, service and rental group broke a record, exceeding TL 5 billion for the first time in the week ending March 31.

While citizens spent a total of TL 11.6 billion on car rental, sale, service and parts with the card in the last week of March 2022, this spending increased by 220 percent to TL 5.4 thousand. million TL in the same period of this year.

In the same week, electricity-electronics expenses made with cards were close to a record.

With the card, which was 9 billion TL in the week ending March 24, the electricity and electronics expenses increased to 11.6 billion TL in the week ending March 31. Thus, in the week ending December 31, 2022, before the New Year hikes, the closest spending to the record was recorded at TL 11.7 billion.

IMPORTS AND DOMESTIC SALES ARE ALSO INCREASING STRONGLY

The expectation that ‘the dollar exchange rate will increase regardless of who wins the presidential elections’ advances consumption, increasing not only card spending, but also imports of these products.

Foreign trade data from the Ministry of Commerce revealed that imports of motor vehicles, tractors, motorcycles and other land vehicles and their parts, spare parts and accessories reached 2.4 billion dollars in March 2023 with an annual increase of 77.6 percent. .

In the same period, imports of electrical machinery and devices rose 39.6 percent to $2.4 billion.

Despite the high current account deficit, the government, which does not want a sharp increase in the dollar rate before the elections, is focused on exchange rate stability. However, the Government, which started with the objective of giving a current account surplus within the framework of the new economic model, is causing a record current account deficit with the decisions it has taken.

According to the latest data, the current account deficit, led by record gold and energy imports, was $9.85 billion in January, the highest monthly deficit in data history. The current account deficit, which was $27.1 billion in 2018, was expected to shrink to $9.9 billion in 2023. The projected current account deficit for all of 2023 in the plan came in just one month.

In addition, car sales reached a record in March after February.

The Association of Automotive and Mobility Distributors recently announced the latest data on the automobile market, which has been growing for 8 months; In March 2023, the automobile and light commercial vehicle market increased 61.7 percent over March 2022, reaching 103,929 units.

This means that for the first time in Turkey, sales exceeded 100 thousand in March.

FEAR OF RENTAL CURRENCY BRINGS CONSUMPTION TO THE MAXIMUM

Speaking to Sozcu.com.tr, Turkish Electronic Industrialists Association (TESID) chairman of the board Yaman Tunaoğlu said: “It stems from the expectation of an increase in the exchange rate,” regarding the expenses of electrical and electronic goods made with the card.

Reminding that there are various expectations about a movement in the dollar/TL exchange rate after the elections, Tunaoğlu said: “Whatever the outcome after the elections, the exchange rate is expected to rise. There may be a 20-25 percent increase,” he said.

“The reflection of this in our industry is the following: because the products either come directly from abroad or even if they are produced in the country, prices in the domestic market will rise because the parts are imported. When this fever for the rise in the exchange rate created the motivation to ‘buy it before they raise me again’, there was an increase in card spending. That is the main reason. We expect this increase to continue in the coming months.”

RISING EXPECTATIONS IN INFLATION AND EXCHANGE

Speaking to Sozcu.com.tr, the Turkey manager of a global automotive brand reported that vehicle sales gained momentum due to the expectation of an increase in the dollar/TL exchange rate after the elections and, as a result, deposit payments made by card increased.

Explaining that the transformation of the automobile into an investment tool was also effective in significantly increasing vehicle sales in recent days, the official said, “Even the vehicles that will come after 6 months have already been sold and the deposits of These sales are paid by card.”

‘DOLLAR WILL INCREASE WHO WINS THE ELECTIONS’

Pointing out that high inflation also had an impact on the increase in card spending in the sector, the official said: “Since the prices of car maintenance services have increased so much, people want to make installments and pay by card. One of the reasons for the increase in card payments is inflation, ”he said.

“After the elections, whoever wins, an increase in the price of the dollar is expected. I give the numbers as an example: if Kılıçdaroğlu wins, the dollar is expected to be 23 TL, if Erdoğan wins, it is expected to rise to 30 TL. In any case, there is an expectation of an increase in the exchange rate. For this reason, there is an increase in card payments in our sector due to fear of the new exchange rates”.

LOW INTEREST CREDIT CARDS ARE ALSO EFFECTIVE

Speaking to Sozcu.com.tr, the Faculty of Economics at Bilgi University Prof. Dr. Cem Başlevent also assessed that the increase in card spending on products directly linked to the exchange rate may be due to the expectation of an increase in the exchange rate.

“Citizens increase their consumption with the expectation that the dollar value will increase before and after the elections and this will be reflected in prices,” said Prof. Dr. “This is reflected in spending statistics,” Başlevent said. .

Stating that an even more important reason is very low interest rates on credit cards, Başlevent continued as follows:

“Since credit card default interest rates are indexed to the Central Bank’s policy rate, they are currently very low compared to other types of loans and compared to inflation. This leads people to consumption.

With the electoral uncertainty gone, people who delay their spending will also spend and I think the dynamism in the market will continue. Because it takes a while for dry shots to show up in prices.”