Exporter selection message: We expect exchange rate support from the new management

Pointing out that the collapse of competitiveness has reached a critical level with the effects of the applied exchange rate policy, exporters affirm that the new administration’s export support policies are urgent, regardless of who wins the elections this Sunday.

The exchange rate loss to which exporters are exposed, who have to convert their foreign currency earnings to TL at a rate that can reach 70 percent, due to the purchase-sale difference of close to 10 percent between the official CBRT rate and the exchange rate. They are found in exchange houses and banks.

The main problem for exporters, who have been experiencing profitability problems for a long time, is that the dollar/TL is priced lower than it should be by the public before the elections, in the policy that bankers define as publicly controlled.

‘WE SELL CHANGE CHEAP AND BUY IT EXPENSIVE’

Exporters are demanding the immediate abandonment of “controlled” exchange rate policies after the elections, or that the exchange rate support granted to exporters be increased from 2 percent to 10 percent in parallel with the difference in the free market.

Affirming that the exporter had to “buy his own money cheap when selling and more expensive when buying” due to the high difference in trade, the representatives of the sector fear that the losses due to the impossibility of competing in exports will increase if the policies of “realistic” exchange rates are not urgently returned after the elections.

Exporters draw attention to the fact that the decrease in the competitiveness of Turkish companies in international markets due to the exchange rate is already reflected in the export figures.

According to pioneering foreign trade data published by the Ministry of Commerce, exports amounted to 19.32 billion dollars in April, 17.2 percent less than last year. In the first four months, it fell 3 percent to $80.9 billion.

On the other hand, bankers call attention to the fact that the intense demand for currencies and gold continues on the last trading day before the elections.

Individuals are not subject to currency restrictions like companies. However, the gap between trade remains open in an unprecedented way, creating a deterrent.

Exporters are already complaining about the loss of exchange rate derived from these practices and the decrease in competitiveness with similar practices. On the institutional side, the demand for foreign currency is high, but companies and banks affirm that it is “almost impossible” to access foreign currency, except under certain conditions, with the restrictions of the Central Bank.

An analysis published in Reuters this week noted that regardless of the election outcome, 2023 is likely to be a lost year for the economy. Turkey, which has experienced record levels of inflation in the past two years and the LT depreciated by about 60 percent, is expected to take time to recover from the damage left by the economic policies implemented.

Şeref Fayat, President of the TOBB Ready-to-Wear and Garment Assembly:

As exporters, if we try to get our own foreign currency, which we have had to exchange due to regulations, from the bank again a week later, we will find it 5 percent more expensive. In a period when we can’t compete and we can’t maintain a price because exchange rates don’t rise enough against inflation, we resent being penalized 5 percent for the difference in buying and selling our own currency. This difference was previously a maximum of 1 percent. When CBRT gave a 2 percent premium to the money we exchanged, it gave us an advantage. Now, when the difference between buying foreign currency on the free market and buying our own currency through interbank prices is 5 to 6 percent on average, we as exporters have become cheap when selling our own currency and expensive. when we buy

For example, to import 100 thousand dollars, I buy my own money 5 thousand dollars more expensive. Since the Central Bank supports 2000 of them, my loss is 3 thousand dollars. In an environment where we are unable to make any profit at this time, we also write a 3 percent FX loss due to the difference.

Regardless of who wins the elections, the CBRT should free up the exchange rate under the free market regime, moving from the current economic model to the traditional and orthodox economic management model we know. Regardless of who wins, traditional methods must be returned.

Burak Önder, CEO of Lux Plastik:

There are two coins that we come across while trading right now. One is the purchase and sale rate of the Central Bank and the purchase and sale rate of the banks themselves. Due to the obligation to convert export earnings into TL, today I am exchanging my dollar, while I sell it, the bank buys it at the Central Bank rate. But 70 percent of our income is based on imports. Tomorrow I am going to import raw material, I will have to convert my TL to dollars and send the money for the raw material. This time, the bank says: ‘I will sell you with my selling institution, not with the Central Bank’s selling rate.’ At that point, a gap between 5.5 and 7 percent begins to form. That is to say, while charging the export price, the bank buys it with the CBRT purchase rate, but I came back tomorrow, I will buy dollars to be able to import, so the bank says: ‘You will buy it from my own institution, not from the Bank Central. Here too there is an average of 6% scissors, although it can go up to 7% for banks. We lose 6 percent on a forced trade.

Fikret Kaya, Vice Chairman of the Kayalar Group Board of Directors:

“Due to the low exchange rate, our exports also decreased. The dollar rate must be determined as a separate rate for the exporter. The next government after the elections, no matter what, should support the exporter’s export price by 10-15 percent. Currently, this rate is 2 percent. In an environment where profitability is already very low, the exporter suffers even more from this situation. The exporter’s foreign exchange price must be competitive and must be protected against inflation. When the currency deteriorates, it must be higher than the effective exchange rate. In the current situation, it should be more than 25 TL. As long as you do not provide this, the exporter’s ability to export is further diminished. Our export figures are currently on a downward trend, and if these rates are so, the decline in exports appears to continue.

If we as exporters are unable to price and sell our products, the decline in exports further reduces the exchange rate in this country. The State goes, this time paying high interest for bringing foreign currency. However, if the foreign currency of the exporter changes, then the exporters will bring that money into the country. But when the currencies do not arrive, this time you have to buy currencies with interest. There is a huge demand for the coin right now. Due to demand, most industrialists and exporters cannot get foreign currency. For example, if you want to go and get a few million dollars right away, there is no such coin on the market.”