Didim Today

Cost of Living keeps dramatically rising in Turkey and particularly in Istanbul. Travel, language learning and technology all take their toll on our pockets as occasional expenses, but the rent and utilities continue to increase. The weak position of the dollar affects the economy and the global markets which also reflect the pace of inflation in Turkey. So, what do you need to know for a closer look at your expenses? In the past few years, the U.S. dollar (USD) has depreciated substantially against the Turkish Lira (YTL), and in 2007, more so

.We fear this trend will continue until one USD equals one YTL which has never happened before in Turkey’s history. The Euro also depreciates, although not as quickly as the USD.

Since April 2007, the USD has depreciated from 1USD = 1.36YTL to a new low of 1USD = 1.16 in November. Mahmut Kocak, Country Manager for the Woolmark Company in Turkey gave me three reasons for the depreciation. All three speak directly to the climate for investment.

1. The anti-inflationary monetary policies by the Turkish Central Bank and the highest interest rate in the world of 17 percent.

2. A stable one-party government implemented one of the longest IMF Stabilization programs in the world which has attracted large investments in TL instruments.

3. An ever-increasing influx of foreign portfolio investments where foreign investors exchange USD for YTL to invest in high-return financial instruments.

Don’t forget that government privatizations continue which has up to now attracted a lot of foreign investment, and in 2008, a peak is expected.

So, let’s look at an example of a one-bedroom apartment and see how much things have changed since the 2001 crash.

2001: USD = 1.70YTL; Apartment Rent was 275YTL. Rent was $162.
2007: USD = 1.16YTL; Apartment Rent is 770YTL. Rent is $664.

While this example shows a 280 percent rise in rent, all daily expenses have also risen in a similar ratio and possibly even more.

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