"Turkey well placed to succeed with new super-lira
Tue Dec 21, 2004 02:22 PM GMT
By James Thornhill
LONDON (Reuters) - If you dressed super-smart in Turkey this year, you could look a billion lira. In 2005, it will be a smart outfit indeed that will cost you a thousand.
Will Ankara's removal of six zeros from price tags from January 1 by replacing a national currency at 1,400,000 to the dollar with one at 1.4 be a success?
The history of such operations suggests they are not always as straightforward as they sound, but the strength of Turkey's economic revival suggests it's in a much better position than some others were in the past to make the move.
In theory, erasing noughts from a currency is simply a numerical move. But past examples show it won't work if the economy cannot sustain the new rate.
'Nearly 50 countries have removed zeros from their currencies, starting with Germany in 1923,' said Debbie Orgill, emerging markets analyst at ABN AMRO.
The results have been mixed, with some countries resorting to the tactic on multiple occasions."
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