Economist Ali Ağaoğlu and journalist Hakan Güldağ drew attention to the importance of the rate of market cash flow in an environment of difficult access to finance during Chance Talks this week. While Güldağ raised concerns about a “squeeze” of the market after the third quarter, Ağaoğlu stressed that the “blood flow” in payment systems should not stop.

Assessing the latest prices in the markets, Ağaoğlu said that the euro/dollar parity, which rose after the ECB’s interest move, could continue its movement towards 1.0450. Ağaoğlu, who expects Brent oil to rise towards $110, said gold and silver prices will slowly start to bottom.

Guldag: The Central Bank left the policy rate at 14% at the seventh meeting. In the CPM text, the growing likelihood of a global recession, current account risk and improving employment were highlighted. Although it is observed to have lost its momentum, it has been stated that it is closely watched if the loans are used in accordance with their purpose. I leave it up to you to interpret it.

Agaoglu: First of all, I say “calm down” to my friends who are trying to create a policy text regarding the interest rate decision that is held constant. Their work is very difficult. In an environment where interest rates are so uncertain, the job of the Central Bank is also very difficult. Even the decision to keep it at 14 is difficult. One of the points that caught my attention in the statement; The statement “Employment gains are more positive than in comparable economies”. Personally, I have doubts about the employment figure. On the other hand, the focus was on the risk for the current account balance, but it was also indicated that the strong tourism-related recovery was continuing. We rely on tourism, but the season is almost over. If we built our set of policies expecting a huge contribution from here, our job is really hard!

Guldag: Since the interest rate meeting has almost faded in importance, we have seen no change in market prices. The USD/TL rate is around 17.70. Obviously, in the market; It does not assume that the rise in the exchange rate will be contained and inflation will be reduced by policies that encourage reading.

Agaoglu: This is micromanagement. If you say the Central Bank made no changes to the policy rate and the MPC text surprised you, it didn’t surprise anyone. As you said, it’s become a variable that obviously nobody pays attention to as a parameter. There is an important matter to which I would like to draw attention. I started thinking that the restrictions on using TL loans might lead to other problems in the coming period.

Guldag: What kind of problems will it cause?

Agaoglu: The most fundamental need of economies is liquidity. One of the most critical issues concerns payment systems. By payment systems, I mean checks, promissory notes, cash, credit cards, money orders and others. If a malfunction occurs anywhere in these payment systems, things can get complicated. In other words, if someone can’t use a loan, can’t pay even a small check, the back of the check is written, or can’t pay a bill, one can go to the problem that can create a snowball effect and turn into an avalanche. What we call “money does not turn in the market” is the rate of return on money. The situation becomes critical if this liquidity or cash flow, which I can call the blood circulating in the body, that is, the rate of return on money, boils down to problems that even undeserving companies will have difficulty making their payments. So many micro-interventions create a situation where the risk of doing more harm than good is greatly increased.

Guldag: I totally agree. In our previous conversation, I quoted the CFO of our company, which accounts for nearly 10% of its industry, that cash flow might be the most annoying issue in the period ahead… Rates interest rates have been increased, not separately, but the issue of access to finance is really important. Everyone expects pressure like September or October in the market. I think the fact that this is constantly being said will start to become a self-fulfilling prophecy.

Agaoglu: Very true. This is why payment systems have to be very, very careful. Blood flow should not stop.

Guldag: ICI President Erdal Bahçıvan also drew attention to the ripple effects of the access to finance problem in his Second Top 500 report. He says the second 500 data is worrying. These determinations belong to the data of 2021. So today it is even stronger. In this regard, this ripple effect, payment risks is really the biggest issue right now. Everyone has put investment aside right now, saying “how am I going to turn my business around”. Because if the credit market between banks and manufacturers is 1, the other is 5. Systems that support each other between companies 5. In the ISO report, the increase in the debts of manufacturers to other companies at a rate much faster than their debts to banks was presented as a new situation.

Agaoglu: The problems encountered on the side of the foreign currencies of the country and the uncertainty on the interest rates make the task difficult for the industrialists. We also talked about access to funding and the problems it will cause in our previous program. The BRSA made a statement to clarify currency requirements for TL loans, but that didn’t work either. Uncertainty remains about the use of TL loans. Let’s say you meet the conditions. How many will you use, how soon will you use it? You found this maturity, it’s hard to find the price. On the other hand, in an environment where 3-month interest rates are approaching 40%, other problems have appeared on the currency side, despite all efforts. DTH interest rates have also started to rise. Interest rates, which are now in the 4-5 band, have reached the 5.5-6 band in monthly deposits. Another aspect of business is that you cannot use TL as a business, but you can use foreign currencies. According to the rule published in 2018. If you still want to use foreign currency, this time the lowest interest rates on foreign currency loans are 9, 9.5. 12, 13, 14, 15 fly through the air.

Guldag: We just talked about CBRT, but on our show, the European Central Bank also made the interest rate decision. The first rate hike in 11 years was accompanied by 50 basis points. We will talk about its effects and future thoughts in detail in the next broadcast. But at this point, I would like to ask you about the parity that our main exporters follow closely…

Agaoglu: I expected him to start with at least 50 basis points. Because you know the Fed made the same mistake. So in my opinion he should have started with 50 basis points, he made the right call. In Euro/Dollar, we saw a decent move of 1.03 as a first reaction. I think after that it has a first target like 1.0450, 1.0525. Euro a little more recoverable. But the Fed side is also important, of course.

Guldag: If I open a parenthesis to the political arena by speaking of Europe. Italian Prime Minister Draghi has tendered his resignation and early elections are on the agenda.

Agaoglu: An instability within the European Union already began during the Ukraine-Russia war, when Merkel left her post in Germany, and the new president arrived and fell largely in the wake of NATO. Politically, it does not present a very strong image of the European Union. If you say that the political crisis in Italy is very important. Let me tell you that Italy is one of Germany’s biggest creditors.

The fall in agricultural commodity prices is coming to an end

Guldag: Recent regulations have oriented exporting companies a little more towards raw materials. It was stored at gold price, now we want to combine it. There are stagnation effects in our export markets and orders, but despite this, continued orders have led to some raw materials.

Agaoglu: Agricultural commodities had risen rapidly and fallen rapidly. The issue of the grain aisle is important. The negotiations are about to be concluded and I think the grain corridor will be open. This is what the world needs. Africa in particular opposes it. The world that will not be indifferent to Africa’s objection. This is why this corridor will open, which pushes prices down. Does it go lower from here; I think we are slowly approaching the end of the agricultural products side.

Guldag: Especially the drop in cotton prices, reaching 40 percent, was remarkable. Production in China, Pakistan, Bangladesh and Vietnam is reduced. So is India. From this point of view, prices are expected to fall a little more. I wonder if we can get in from here…

Agaoglu: There are 90 levels in cotton, and even the previously seen 80 levels. I think this is one of the lowest reviews. I don’t think it’s reasonable to go any lower. There was the last sharp rapid rise after September of last year. It went up to 150, so it’s a bale of cotton. It looks like the 90-95 region will be the base for cotton in the near term. At least the 85-95 region seems to be safe and expensive.

Oil returns to $110

Guldag: Let me also address the traditional issue of oil. It goes up and down, it really surprised the market.

Agaoglu: 200-day moving average of $96.5. He tried gold. This level is for defense level positions in a sense. If it breaks down, which I don’t expect anytime soon, $85 will open up. Before that, I think there will be a move towards $110 again. Because this is not a fight that will end easily, it will take a long time.

Guldag: Opportunism is also at its peak…

Agaoglu: Manipulation can be confused with speculation, speculation with manipulation. Of course, the blackmail of Russia is also included in this. Nord Stream is Russia’s most powerful energy weapon. I don’t think they would want to use it now either. The flow of gas has started again. In summer, the strong heats are still early. There is Karakış, so I think they will try. The situation is slightly different for US crude oil. We are slowly approaching the middle of the holiday season, especially in the United States. At the end of August, the winter storms will begin to subside. I call him too soon.

Six of the 1615s look hard underneath

Guldag: Gold at $1680 an ounce, the lowest level since August 2021. If you’re not mistaken, it fell to $1677 in March 2021. How do you comment?

Agaoglu: 1680 significant minimum. There was a reaction from here and it jumped to 1700. If the bearish move continues I don’t expect it to drop below 1615. 18.25 is where several levels techniques come together in silver. Interest rates are included in the prices. The demand for cash in dollars also led to sales of gold and silver. I think gold and silver will slowly start to form a bottom.

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