Eyes will turn to the US dollar on November 18
The dollar / TL is moving above the 10 level at new historical highs due to the dollar’s appreciation in parallel with the rise of inflation in the United States and ongoing inflation-monetary policy concerns in Turkey.
As due to rising inflation in many countries of the world, central banks in both developing and developed countries tighten their monetary policy, Turkey’s Central Bank loosens its monetary policy despite the rise in inflation and depreciation in the purchasing power of the TL – causing life to be even more difficult for majority of the citizens.
The CBRT’s monetary policy decision which is monitored as the most important agenda of the week in the markets, will be announced at 14:00 on Thursday November 18th. It is estimated that the CBRT will reduce its policy interest rate by another 100 basis points this week to 15 percent. The CBRT had already made an interest rate cut of 300 basis points in the previous two months.
EXPECTED TO STAY FOR MONTHS
Consumer inflation, on the other hand, is expected to remain at 20 percent for months the rate that was recorded in October. The government, which is trying to mitigate the impact of rising inflation on low-income earners, is said to be considering various options. Easing practices will become apparent in the budget, especially the determination of the minimum wage at a high level.
THE DEPRECIATION OF TL EXCEEDED THE PSYCHOLOGICAL LEVEL
The TL lost another 3 percent against the dollar last week which is considered to be an important psychological level.
The Turkish LIRA, which has lost two-thirds of its value in the last five years, has become the most devalued currency by a large margin among the currencies of developing countries. The depreciation of the TL, which has reached 25 percent since the beginning of the year, and inflation, which has not come down from double digits,are also melting the purchasing power of local stores.
THE LATEST SITUATION IN THE DOLLAR
Dollar/TL was at 10.0360/10.05 as of this morning after exceeding the 10 level on Friday evening. Euro/TL was at 11.4560 at the same time and TL 10.7528/10.7847 on a basket basis.
INVESTORS TURN TO THE STOCK MARKET
After the interest rate cut, the depreciation of the TL and the decline in the returns on investment instruments led investors to the stock market. The BIST-100 index has been rising almost continuously since mid-October, as investors turn to exporting companies with foreign exchange income. The index closed Friday up 0.83 percent, having gained 16 percent in the past month.
