Foreign exchange outlets in Turkey are to pull down their shutters in protest at a government decision that means people trading foreign currencies must provide ID.
The decision came amid the latest wave of Turkish lira (TRY) depreciation that took the currency to an all-time low of 9.85 versus the dollar on October 25, some 24% down in the year to date. Officials are wary record levels of dollarisation will worsen, weakening the lira further. The level of shock felt by Turks at the state of their currency is illustrated by how petrol station owners are wondering how they will fit a “10” on price boards not designed to take the double digit.
“The [FX] businesses will close shutters on November 4. We want the government to reconsider the new regulation and we will appeal against it in court,” said Ulas Cabuk, head of an association that represents exchange bureaux owners.
The Treasury and Finance Ministry issued the directive on ID two weeks ago when the TRY was already in fresh trouble against major currencies following the introduction of a new rate-cutting cycle despite high and rising inflation. The ministry denied that the regulation was an attempt to intervene in the FX market.
Exchange office owners also criticised the decision on the grounds that it would only encourage unrecorded and informal FX trading. The new practice would cost them money and time, they said.
“People are looking for alternative avenues. They now going to go to unauthorised people or jewellery shops to buy or sell FX,” said Mustafa Onder, chair of another exchange office owners’ association. Even though they are not permitted to do so, jewellery shops traditionally engage in FX trading in Turkey.
The lira’s latest low against the USD came after its woes were worsened by President Recep Tayyip Erdogan indicating at the weekend that Turkey would expel 10 western ambassadors, including the US envoy, for demanding the release of jailed philanthropist Osman Kavala. Erdogan’s opponents hit out at his shock statement, saying it was an attempt at distracting Turks from his economic mismanagement. The threat to make the expulsions was withdrawn following a cabinet meeting and after embassies in Ankara made general statements about not interfering in the host country’s domestic affairs.
By around 12:15 Istanbul time on October 27 the TRY was trading at 9.51 versus the USD, 0.12% stronger on the day.