WHAT HAPPENED THE FED INCREASE INTEREST RATE IN TURKEY?

WHAT HAPPENED THE FED INCREASE INTEREST RATE IN TURKEY?

CURRENT STATUS

                Everybody knows the global banking economic crisis that US-based erupted in 2008. This crisis took place as the greatest crisis since the Great Depression in 1929 by economists. We can say that the crisis’s reason is excessively loose credit policy in America. I said American Central Bank FED how to follow the effects of the crisis to minimize. The FED was forced to go outside the usual policy in fighting the crisis. It has aimed to revive and thus reduce unemployment rates that reaching record levels by implemented an expansionary monetary policy. Besides it has attracted the interest rates for a lot of players in markets provide cheaper funds. This policy result in increasing the amount of circulating dollar has become cheaper against other leading currencies and dollar has shifted developing countries (Turkey, Indonesia, India, South Africa) to obtain higher returns. Because these countries has high interest rates. So abundant and cheap dollar entry to our country. As a result, borrowing costs have fallen and this has pushed markets dept by dollar.  We can see that most of the company’s foreign currency debt is dollar denominated debt.

WHAT HAPPENS WHEN INTEREST RATE INCREASED?

                So, what happens if increased interest rate in United States in Turkey? The first thing that can be told to leave amount of dollar from Turkey. Economists said this situation is so bad for our country. The rationale is that Turkey’s economy needs or dependence hot money a lot. Our economy is too fragile. On the other hand, the person that borrowing cheaply in dollar so worried. News of the rate hike (not itself) causing the dollar is appreciation against the lira. In the situation that news flow indexed troubled end of 2015 awaits people that has dollar debt. In light of all them a difficult period comes for Turkey we can say. I hope the economy management will take the necessary measures during this period and our economy will bump the least damaged this process

P.S: I am so sorry for my English. It is getting better in time.