Page 18 - bne_May magazine 2023_20230503 BRICS

18 I Companies & Markets bne May 2023
that for a short while proved an obstacle. It is now mainly trading in the 19.30s, with some spikes.
Amid the booming lira supply and hard currency outflows via record trade deficits, officials only keep the lira from entering into a nosedive by coercing bankers into blocking and gumming up domestic FX demand. Also supportive are unidentified inflows and support from “friendly countries”.
Another lira calamity would come as no surprise. It could happen at any time.
The turbulence-free mood on the global markets, meanwhile, remains intact. Turkey’s five-year credit default swaps (CDS) remain below the 600-level, while the yield on the Turkish government’s 10-year eurobonds remains around the 9%-level.
Tahtakale at the Grand Bazaar, known as the “Footed Bourse”, is the most famous over-the-counter (OTC) forex market in Turkey.
Do not ask where its FX banknotes come from. Ekonomi asked and was told that they arrive from the “shadow side of the real sector and Anatolia”.
Anatolia is famous for its “dollar mines”. The “shadow side” could, for instance, be dealing with the production of some “white goods”.
Some say there is actually a wellspring under the Bazaar. Sometimes, FX banknotes well out, sometimes gold. The
late Nasrullah Ayan gives some hints about this mysterious source in his autobiographical book The Bourse King.
The other end of the well system opens into Switzerland.
For a taste of what is going on, we can recall an old story.
In 1985, Ahmet Ozal (then PM Turgut Ozal’s son), Gunes Taner (Turgut Ozal’s aide), Mehmet Percin (an MP) and Bulent Semiler (general manager of state-owned Emlakbank) held
a meeting in a room at Dolder Grand Hotel in Zurich with Yasar Akturk (a drug smuggler known as “Barber Yasar”), Muhammed Sekerciyan (a Lebanese money launderer), Ugur Suzer (a fictitious exporter, or in other words a person who launders money via non-export activities), Hadi Urug (son of then army chief Necdet Urug, who was a partner of gangster Dundar Kilic), Yakup Kefeli (a money launderer), Suphi Asicioglu (a heroin trader), Turan Cevik (an FX/gold smuggler and fictitious exporter) and Emin Gorpe (a partner of drug smuggler Behcet Canturk), according to daily Cumhuriyet.
The newspaper also claimed that Turgut Ozal and Tekirdag MP Ahmet Karaevli were present at the meeting.
In May 1985, Turkey’s parliament lifted jail sentences for FX and gold smugglers.
In November 2008, Turkey’s Erdogan administration, then still within its first decade of rule, introduced the first of its so-called “wealth amnesty laws”. The legislation is still in effect. Quite simply, no one ever asks, “Where did you find it?” when someone brings a pile of money or trunk of gold into Turkey.
Russians remain calm as ruble exchange rate rapidly weakens past pre-war value
bne IntelliNews
For the vast majority of the fourteen months following President Vladimir Putin’s decision to launch a full- scale invasion of Ukraine, the Russian ruble has been stronger than it was prior to the war. This trend has now rapidly reversed, and the ruble finds itself in free fall.
On February 23, 2022, a dollar was worth RUB80.7, a similar rate to where it had sat since the outbreak of Covid-19 in March 2020. Following a short spike to RUB134 in the immediate weeks following the outbreak of war, the exchange rate eventually settled between RUB50 and RUB60, putting the Russian currency in a stronger position than it had been in pre-invasion. However, since the turn of the year the ruble has
www.bne.eu
started to tumble, eventually weakening past its pre-war value. As of the time of writing, the dollar is now worth RUB81.6.
Despite the blow to the value of the government's coffers caused by the plummeting value of the ruble, the average Russian citizen is not expected to feel the sting immediately. As a vast majority of the populace survives paycheck to paycheck and hand to mouth, the lack of significant savings means the impact of the fall is unlikely to cause much fear in the general population in the near future. There have been no reports of frenzied bank withdrawals or a rush for foreign currency, and the country's financial institutions are yet to report any significant shortfall of dollars or euros.