Turkish food exporters seek 'dual' lira rate to cope with soaring costs
By Ceyda Caglayan
ISTANBUL, April 5 (Reuters) -Turkish food exporters are asking the government for a "dual exchange rate" system that would help them cope with ballooning costs and foreign competition by allowing them to swap their dollar earnings for liras at a preferential rate.
Kazim Tayci, who heads a trade body, whose members export about $4 billion annually said, exporters should be getting at least 40 Turkish lira for every dollar instead of the current market rate of just above 32.
"To prevent exporters from being disconnected from production and losing their foreign markets, the implementation of a 'dual exchange rate' system is necessary," the chairman of Istanbul Cereals Pulses Oil Seeds and Products Exporters' Association (IHBIR) told reporters late on Thursday.
"Like all exporters, food exporters are currently suffering (and) the reason is that the current exchange rate is far behind inflation," he said.
Turkey's annual inflation, which has been running at double-digit rates for years, climbed to 68.5% in March, with prices climbing by more than 15% in the first three months of this year alone.
By contrast, the lira has only weakened some 8% this year as the authorities continue to partially manage the exchange rate and analysts say it needs to go much further to account for the massive loss of its domestic purchasing power.
Under a regulation introduced to help replenish Turkey's foreign reserves and support the lira, exporters are required to sell 40% of proceeds to the central bank.
They get compensation for currency losses equal to 2% of the converted amount of lira in such transactions.
Earlier this year the main exporters association sought an increase to 4% and later called for 10%, though Tayci said that in itself would still not be enough.
($1 = 32.0121 liras)
Reporting by Ceyda Caglayan;
Writing by Ece Toksabay; Editing by Jonathan Spicer and Tomasz Janowski
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