The Dollar started the new week by hitting the new 2022 high of 17.80. As the economy’s need for a new source of foreign exchange grows, returns on exchange-protected deposits are tracked. This week, the Fed’s decision and the CBRT inflation report will be monitored.
The dollar/TL continues to rise towards the 18 level on concerns over economic preferences, especially interest rate and exchange rate policy, high inflation and fear of a global recession.
The dollar rate was seen at 17.80 today. This level was last seen in the exchange rate on December 20.
Markets will follow the Central Bank’s inflation forecast revision (CBRT) for the end of the year, which is 42.8%, and the decision of the United States Federal Reserve (Fed) on interest rates this week.
THE INFLATION REPORT WILL BE ANNOUNCED
Inflation is expected to end the year at 70% after hitting 85% in the third quarter, according to a Reuters survey.
While it is certain that the CBRT will increase its forecast by 42%, it is unclear how close it will be to the market expectation of 70%. In previous revisions to inflation forecasts, the Bank had favored levels well below market forecasts.
The Central Bank also kept the key rate at 14% last week, saying it will continue to focus on macroprudential measures such as credit and liquidity management, not interest rates.
NEEDS RESOURCES, EYES ARE ON KKM
While the CBRT’s net reserves are $6 billion, the lowest level since 2002, bankers calculate minus $55 billion in non-swap foreign exchange reserves.
A bank’s currency trader said, “With the current policy, we are seeing limited TL depreciation every day. Equilibrium in foreign currencies can only be achieved with a limited depreciation in TL. Whether a new source of currency comes or not is always the main agenda of the market. The need for new resources for the economy is higher than ever. Tourism support is also excellent due to the summer months,” he said and added:
“Corporate Foreign Currency Protected Deposit (KKM) yields, which will begin this week and intensify for 3-5 weeks, are also being watched in the markets. We have yet to see massive demand for foreign currency from the KKM. However, whether KKM yields will create currency demand will be important to TL’s price.”
A 75 BASE INCREASE IS EXPECTED FROM THE FED
As the dollar found support ahead of the Fed’s expected sharp rate hike this week, investors turned to safe-haven currencies amid data pointing to a slowing global economy.
While priced in markets where the Fed will raise interest rates by 75 basis points from the monetary policy meeting that ends Wednesday, futures are giving a 9% chance of a rise. of 100 basis points.
TL LOSS HAS EXCEEDED 25 PER CENT THIS YEAR
The dollar/TL ended last week at the level of 17.76. The exchange rate started the day at 17.7800/17.7960 at 08:43 this morning.
According to this data, the TL has lost 16.5% since the beginning of April and 25.9% since the beginning of the year.
The Turkish 5-year-old CDS finished last week with 844/856 points, after approaching 900 points in recent weeks.
As CDS’s 900 basis points approach the cost of foreign borrowing in double digits, low reserves raise concerns that exchange rate policies will not be sustainable over the long term without a new source of foreign exchange. (Reuters)