Has the exchange effect passed?

There has been a marked increase in the dollar exchange rate since last October. Although this increase has halted in

February and even some decline has been experienced, we are talking about an increase of 24 percent in these five months’ total. However, in this period there was an increase of 11.5 percent in domestic producer prices and a 7 percent increase in consumer prices. Of course, we cannot derive such a meaning like “it is such a low increase” from the comparison between the exchange rate and inflation. What we mean is the increase in the exchange rate leads to the increase in prices. And when the Central Bank interprets price developments of the previous month, the effect of the depreciation in the lira, which it has specifically highlighted, will put pressure on prices over the coming months. After exports, we earn the most money from tourism. Moreover, tourism revenue is a net income (if investments exclude payments like external loans). They all stay inside the country. Here we seem to be even worse that last year’s net income. What happens if tourists come from Russia in large numbers as it used to be when their economy was at its best... No Western tourist arrives! We have to pull further down the tourist expectation, especially after the referendum rally tension started with Germany and jumped to Netherlands and Austria.

So you need to be prepared for less but more expensive currency. In this case, how do we break the pressure from foreign exchange on inflation?

If the main factor that led to such a rapid increase in prices is not the exchange rate increase, what else could it be?

But the danger is still growing behind the door! We have not yet experienced the effect of exchange rate on prices. Of course, every increase in the exchange rate is not reflected in prices at the same level, but it cannot be said that the current exchange rate increase can be reflected in prices.