Tourists snap up luxury products as Turkish lira tumbles

World
Europe

01:49

The collapse of the lira will significantly reduce Turkey's economic growth. However, tourists are flocking to luxury stores in the country amidst the ongoing crisis to take advantage of the volatile currency rate.

The direct influence of the Turkish currency crisis may be on the euro because European banks have a lot of exposure to Turkish assets. Meanwhile, Turkey’s luxury brands are seeing huge crowds lining up outside their stores since the slumping Turkish lira has made the country’s luxury products the world’s cheapest.

The number of Chinese tourists traveling to Turkey is currently at a three-year high, as the country has been heavily promoting its tourism products this year. Online Chinese provider of travel services Ctrip has planned for 26 groups to travel to Turkey for the Mid-Autumn and National Day holiday, up 130 percent from a year ago.

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"We contacted tourists in Turkey and many of them now want to go shopping, but our local guides are also telling us the lines are very long. We will add more stops in shopping malls and luxury stores to our future Turkey travel packages if that's what most of the customers want," said Han Lijie, business director of Ctrip in the Middle East and Africa.

In fact, the latest reports from Istanbul showed that local luxury stores have increased their prices by 25 percent, and some shops are limiting purchases to one item per passport. Local travel agencies have also closed payment services in lira to avoid currency speculation.

Li Liuyang, chief analyst of China Merchants Bank said luxury companies might re-price their products more frequently in countries suffering from a weak currency.

"We can see such phenomenon in 2014, when the Japanese yen depreciated sharply against the US dollar, and when the Korean won sharply depreciated, their luxury shops were also full of buyers from all over the world," Li added.

Many tourists from Arab countries are also taking advantage of the lira’s fall.

Nasser Al Yami from Saudi Arabia said that he usually enjoys visiting Turkey for the beautiful weather, but this time they are “benefiting from the situation of lira against the dollar, it’s much more cheaper” and he is shopping much more.

A doctor from Kuwait, Khaled, said he had been shopping for several days now but has realized that some shops were now changing their tags to keep up with the change in currency, “so the prices on Wednesday are not as cheap as they were on Monday”.

The tension between Turkey and the US continues as Turkey on Wednesday retaliated the US tariff and sanctions with raising the tariffs of several US originated products including rice, tobacco products, vehicles, alcohol, coal and cosmetics.

(Michal Bardavid also contributed to the story)