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Exchange rates: October moves

A long-simmering diplomatic dispute between Turkey and the United States came to a head in October with both sides halting the processing of visas for the other country's nationals. As the bans stand, few Americans will be able to apply for a new visa to visit Turkey - and vice versa - be they businesspeople or tourists. Last year, more than 100,000 such non-immigrant visas were granted to Turks wishing to visit the US.

The tit-for-tat actions came after two American embassy staff in Istanbul were arrested by Turkish authorities, who may be trying to pressure the US into extraditing Fethullah Gulen, an Islamist preacher that Turkey blames for organising last year’s failed coup.

The visa bans will obviously cause difficulties for global mobility teams trying to manage moves between the two countries. On top of that, expatriates already in post could see their cost of living affected. With its important tourism industry threatened by the likelihood of reduced visitor numbers, Turkey's currency is also feeling the strain.

The lira was the world's second-weakest currency in October, falling 5% against the euro (see first table). However, as our final table below shows, the recent depreciation is also a continuation of a long trend. With the Turkish currency having fallen 30% in the last year, most foreign currencies can be exchanged for many more lira than before. On the other hand, high inflation in Turkey (latest 11.2%) is pushing cost of living higher and offsetting some of the currency gains for international assignees.

Turkish nationals working abroad will be losing out when exchanging lira for most host currencies, but many will also be experiencing lower inflation than they would be at home.

The overall impacts will vary according to circumstance and are impossible to estimate meaningfully without proper consideration of all the relevant factors. That is where ECA's expert analysts come in. Our September 2017 Cost of Living Survey (to be published in November) will provide a much clearer picture of expatriate cost of living in Turkey (four cities), USA (46 cities) and most of the rest of the world (464 locations).

If you need assistance with cost of living or any other global mobility issues, please get in touch.

Countries experiencing largest currency losses in October
Country
Currency code Movement v EUR
2 - 30 Oct 2017 (%)
Inflation
(%)
Cook Islands NZD -4 -0.3
Ethiopia ETB -14 4.5
Mexico MXN -4 6.3
New Zealand NZD -4 2.1
Turkey TRY -5 11.2

The Ethiopian birr was the world's weakest currency in October after a devaluation was engineered by the central bank, as we detailed in this recent post

No currency gained more than 3% against the euro in October as the next table shows.

Countries experiencing largest currency gains in October
Country
Currency code Movement v EUR
2 - 30 Oct 2017 (%)(%)
Inflation
(%)
Eritrea ERN +3 8.9
Jamaica JMD +3 4.6
Kazakhstan KZT +3 7.1
Korea Republic KRW +3 2.1
Mauritania MRO +3 1.5
Moldova MDL +3 7.6
Mozambique MZN +3 10.8

Finally, here is this month's selected currency movements table:

Selected currency movements (v EUR)
Country Currency code % movement to 30 October 2017 v EUR since: Latest official annual inflation (%)
    2/10/17
(1 month)
31/7/17
(3 months)
1/5/17
(6 months)
31/10/16
(12 months)
 
Argentina ARS +1 +1 -22 -24 23.1
Australia AUD -1 -3 -4 -5 1.8
Brazil BRL -1 -3 -10 -10 2.5
Canada CAD -2 -2 -1 -2 1.6
Chile CLP +2 +3 -2 -4 1.4
China CNY +2 +2 -3 -4 1.6
Egypt EGP +2 +2 -4   31.6
India INR +2 -1 -8 -4 3.3
Indonesia IDR 0 -1 -9 -11 3.7
Japan JPY 0 -2 -9 -15 0.6
Kenya KES +1 +1 -7 -9 7.1
Korea Republic KRW +3 0 -6 -5 2.1
Mexico MXN -4 -7 -8 -8 6.3
Nigeria NGN +1 -14 -22 -21 16.2
Norway NOK -1 -2 -2 -5 1.6
Philippines PHP 0 -1 -10 -13 3.4
Poland PLN +1 0 -1 +2 2.1
Russia RUB +1 +3 -9 +2 3.0
Singapore SGD +1 0 -4 -4 0.4
South Africa ZAR -3 -8 -14 -9 5.1
Sweden SEK -1 -2 -1 +2 2.1
Switzerland CHF -1 -2 -7 -7 0.7
Turkey TRY -5 -7 -14 -30 11.2
United Kingdom GBP -1 +1 -5 +1 3.0
United States of America USD +2 +1 -7 -6 2.2
Venezuela VEF +2 +1 -7 -6 274.0
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