Under the impact of the epidemic this year, many countries around the world, including Brazil, Argentina, Iran, Turkey, etc., have experienced crazy depreciation of their currencies against the U.S. dollar. Turkey is facing severe economic tests and the “big crisis” of fiscal leadership. earthquake”. However, since the end of May, the RMB exchange rate has continued to appreciate strongly against the US dollar.
As an important market for China’s textile machinery exports, despite the impact of the epidemic this year, many textile machinery companies have still received a lot of orders from Turkey. Under such circumstances, for companies in the industry, Any chance?
China’s textile machinery exports to Turkey
According to statistics released by the China Textile Machinery Association, exports to Turkey from January to December 2019 were US$186 million. , an increase of 5.17% compared with the same period last year, accounting for 4.90% of total exports.
Among them, the export of chemical fiber machinery was US$67.2396 million, a year-on-year increase of 138.78%, accounting for 36.25% of Turkey’s export value: the export of synthetic fiber filament spinning machines was US$13.3693 million, a year-on-year increase of 267.96%, accounting for 36.25% of Turkey’s chemical fiber exports. Exports accounted for 19.88% of the total. Chemical fiber deformation machines exported US$46.8889 million, a year-on-year increase of 122.93%, accounting for 63.73% of Turkey’s chemical fiber exports. With the adjustment of the global textile industry layout, chemical fiber machinery exports to Turkey have maintained a significant growth trend since 2020. Exports of nonwoven machinery and knitting machinery declined relatively significantly.
The Turkish lira has depreciated by more than 30%
Affected by the epidemic, Turkey’s domestic economy is facing a severe test.
In recent years, Turkey’s economy has continued to be sluggish, and it has faced multiple challenges during the epidemic. This comes as investors worry about declining foreign exchange reserves and the ability of Turkey’s central bank to cope with double-digit inflation.
After Albayrak became Finance Minister, the Turkish lira collapsed due to US sanctions in August of the same year, and its exchange rate against the US dollar fell by 45%. Since the beginning of this year, the lira’s exchange rate against the US dollar has depreciated from 5.9:1 to About 8.2:1, a depreciation rate of more than 30%.
Tourism is the pillar of Turkey’s national economy An important source of industry and foreign exchange, it attracted nearly 52 million foreign tourists in 2019 and generated US$34.5 billion in revenue. In the first half of this year, only 4.5 million foreign tourists entered Turkey, a sharp drop of 75% year-on-year, and foreign exchange income from tourism has dropped significantly.
It is reported that since the beginning of this year, the total foreign exchange reserves of the Central Bank of Turkey have dropped by more than half, leaving less than 47 billion US dollars, the lowest in many years.
Economic shrinkage has led to currency depreciation and high inflationary pressures in Turkey. Türkiye’s annual inflation rate remains high at double digits, currently at 11.89%.
The Central Bank of Turkey raised the policy interest rate from 8.25% to 10.25% in September. This was the first increase in the policy interest rate since 2018, which surprised investors. Reuters reported that further raising interest rates would help boost the Turkish lira and curb inflation, but the Turkish Central Bank’s Monetary Policy Committee decided to keep policy rates unchanged at its most recent meeting in October.
According to Reuters, Erdogan may pressure the new central bank governor Abal to lower interest rates in order to help the Turkish economy recover from the impact of the new crown epidemic. To prop up its currency, Turkey has been burning through foreign reserves faster than any other major developing economy.
“Big Earthquake” in Turkey’s Financial Leadership
A statement on Instagram by Turkish Treasury and Finance Minister Albayrak announced his resignation.
He said in the statement, “Due to health problems, I have decided not to serve as a minister. I have been a minister for nearly five years. I want to spend time with my mother and father , wife and children.” He said that his family had fully supported him for many years, but he had to ignore them because of his work.
Turkish News TV reported that multiple officials from the Ministry of Finance confirmed Albayrak’s resignation. It is not yet clear how President Erdogan, who is his father-in-law, would respond.
In the view of some analysts, Erdogan regards Albayrak as his successor. Albayrak’s resignation comes as the Turkish lira depreciates to a record low.
Previously, Erdogan had just replaced the governor of the Central Bank.
Erdogan signed a presidential decree on November 7 to remove Murat Uysal, Governor of the Central Bank of Turkey, from his post and appoint Naji Abal, head of the Strategy and Budget Department of the Presidential Palace, to replace him. . Abal served as Finance Minister in Erdogan’s government from 2015 to 2018.
It is worth noting that Uysal has served as president for only more than a year. Erdogan dismissed then central bank governor Murat Çetinkaya in July last year, criticizing Çetinkaya for failing to lower interest rates, and appointed then central bank deputy governor Uysal to replace him.
The RMB appreciated nearly 8% against the trend
Due to China’s proper prevention and control of the epidemic, China took the lead in realizing recovery in the global economy, and the weakening of the US dollar index itself, the RMB exchange rate has been rising in shocks since the end of May. , since the end of May this year, the RMB exchange rate has been rising strongly.
As of now, the RMB exchange rate against the US dollar has appreciated by nearly 8% from the low point at the end of May.
Many opinions believe that , the current strong momentum of the RMB exchange rate is expected to continue in the short term. Li Chao, chief economist of Zheshang Securities, believes that there is still room for appreciation of the RMB exchange rate in the future, and the exchange rate fluctuation center will continue to be raised from the end of this year to next year to 6.5, with a fluctuation range of 6.3- 6.7. Wang Tao, chief economist of UBS Securities China, also predicts that the RMB exchange rate against the US dollar is expected to appreciate slightly to around 6.5 before the end of the year.</p
