Turkey pumps brakes on car imports (Al Monitor, Sept. 8, 2020)

The Turkish government has enacted drastic tax measures to curb car imports as it scrambles to ease a foreign exchange crunch. The move aims to encourage the sale of locally produced vehicles, but its impact remains questionable in a country where demand for imported cars has been traditionally high.

An ongoing flight of foreign capital, coupled with a sharp decline in hard currency revenues from exports and tourism during the coronavirus pandemic, have brought Turkey’s current account deficit to some $30 billion, with Ankara losing control of foreign exchange prices despite costly efforts to keep them in check. The price of the dollar shot up more than 7% in a mere month, hitting the region of 7.35 liras in mid-August.

The demand for foreign exchange has been driven mainly by importers, entities indebted in hard currency and savers who see foreign exchange as a safe haven to preserve the value of their money.