Turkish economy fragile against factors that create pressure on TL against dollar
Turkish economy has long been suffering from fluctuations in TL/dollar rate causing high inflation in the first place and increasing foreign debts. The steps taken by the government have not been a cure either on the way to recovery.
On 20th May while the favorable course observed in the currencies of emerging economies was also reflected in TL, there was some downward movement in dollar/TL, but the exchange rate still kept its course above 6.
Markets are monitoring major issues such as election process of Istanbul mayor and the decisions of Supreme Election Board as well as the developments regarding S-400 missiles and F-35 planes which have caused serious disagreement with the USA.
Regarding the course of the dollar some experts have commented as follows; Dollar has incurred a little loss in momentum regarding its upward movement. There seems to be a positive pricing on the front of the emerging markets abroad. It looks as if we are going to see a low volatility, this week which is useful for emerging markets.
On the other hand the growing trade tension between the US and China is closely monitored by markets. As will be recalled, the US Department of Commerce had announced last week that Huawei and its 70 subsidiaries were added to the blacklist. Based on this decision, Huawei was prohibited from buying parts and technology from US companies, without government approval,
Another issue is the tendency of foreign currency accumulation of the locals in Turkey causing pressure on dollar and the government is following measures to be taken in this regard, closely.
On the other hand, possible measures are being followed for the tendency of foreign currency accumulation of the locals, which have been an element of pressure in the Turkish lira at the local level and have been continuing for six months.
The authority expects banks to be diligent about the transition from dollarization to Turkish lira in the deposit area by putting measure such as giving premium to the branches of banks or to target branches in return for TL deposits.
All in all experts comment that issues such as US-Turkey relations to include S400-Patriot preference to be made by Turkey, global trade wars, expansionary steps to be taken by the authority to support the economy and budget, Istanbul local elections and accumulation trend of foreign exchange by locals as well as high level of inflation and unemployment will continue to create pressure on markets and lira.
