SHAFAQNA TURKEY – USD/TL was 19.18 at 08:58 this morning. These data show that TL depreciation accelerated as the post-quake elections approached, but remained limited.
While the Central Bank (CBRT) launched a new Turkish Lira denominated KKM product that has no interest rate cap for companies, yesterday the Treasury lifted the cap on TL denominated KKM offered to individuals.
In policy, the direction of the exchange rate, credit, deposit, and treasury bonds is determined by the public. Economic management defines this process in the exchange rate policy as “stable TL”. However, since exporters have lost their competitiveness, they are demanding a new devaluation of the Turkish lira from the population.
Growing opinions that the dollar/Turkish lira price is lower than it should have been before the elections and that the Turkish lira should depreciate is boosting interest in foreign currencies.
Elections are closely monitored
All steps taken in the last 1.5 years after the earthquake are aimed at reducing the demand for foreign exchange or increasing the inflow of foreign exchange into the country. Bankers believe that steps in this direction will continue until the elections scheduled for May 14. Elections, on the other hand, are being watched closely by the markets as fundamental changes in economic policy could occur.
The manager of the bank’s foreign exchange department said: “Yesterday’s decision by the CBR is a step taken for companies that will make payments in foreign currencies in the future and are considering converting this into demand in the spot market with TL in hand. This will reduce the demand for foreign currency in the spot market by as much as the new system will be used. On the other hand, the liberalization of individual interest rates in TL aims to divert spot demand for foreign exchange from the individual side to KKM deposits. The interest rate on the TL deposit is about 30%, and the interest rate of TL KKM could increase from the current 11.5% to 20%, maybe a little more.”
Possible S&P Global Rating Tracked
Today, the foreign trade data for February and the Finance Ministry’s borrowing program for the next three months are on the agenda. After the market closes today, S&P Global’s possible ratings will also be monitored.
As the dollar prepares to close the second quarter of the year in the red on world markets, investors believe that US interest rates are approaching their peak and the dollar is starting to lose its yield advantage.
The dollar index, which measures the dollar against six major currencies, was flat at 102.24 and fell 1.3% for the quarter as safe-haven demand eased as concerns over the banking sector subsided.
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