Strong euro may help Turkish exporters: Expert

ISTANBUL- Anadolu Agency

Turkish exporters deem the rise in the euro/U.S. dollar exchange rate as a potentially beneficial development, while the uncertainties over the independence of the Fed fuel concerns.

U.S. President Donald Trump is considering selecting a new name to chair the Fed in September or October. The Fed’s likelihood of making three rate cuts by the end of the year increased, causing the euro/U.S. dollar exchange rate to rise to 1.1745 last week, a nearly four-year high, stabilizing at 1.1730.

The decline in the U.S. dollar showed that investors responded to Trump’s decisions by selling their dollar assets, putting downward pressure on the U.S. Dollar Index.

Tonguc Erbas, general manager of Türkiye-based financial services firm Ahlatci Portfoy, said the European Central Bank (ECB)’s tight monetary stance to bring down the bloc’s inflation to 2 percent also contributed to the rise.

“The rise in the euro/U.S. dollar exchange may have been positive for Turkish exporters because half of Türkiye’s exports go to Europe, but most of our imports are dollar-based,” he said.

“The rise in the exchange rate is allowing euro-based revenue to increase when converted to Turkish Lira.”

Erbaş noted that the Turkish industrial sector in particular could benefit from the exchange rate, but the exchange rate risk on the import side needs to be monitored closely.

Türkiye's exports totaled $110.9 billion in January-May this year, 39 percent of which were to the EU, up 7.5 percent versus the same period last year, according to the Turkish Exporters’ Assembly (TİM).