How long will resistance of Central Bank to keep dollar TL rate under 14, last?

The economy management is making a great effort to keep the dollar below 14 TL. On the previous day (Tuesday), when the dollar exceeded 14 TL, according to Reuters information provided to bankers, there was an intervention of $ 1-2 billion, in the market. Also, according to Reuters, when the dollar jumped to 14.68 TL last week, due to the impact of Russia’s invasion of Ukraine, $ 4 billion in sales were made from reserves.

The task of economy administration is difficult. The reason is we are currently facing a global wave that is too strong to be suppressed by the reserves of the Central Bank. An analyst at the Swiss bank Swissquote, notes that there is a flow towards dollars and “safe havens” all over the world, mainly due to concerns caused by Russia’s invasion of Ukraine. The same expert says: “At the moment, the Central Bank is trying to keep the dollar. But with the increase in global demand for the dollar, the cost of maintaining the dollar/TL parity at a constant level is inevitably increasing. That is why upward attacks can be seen from time to time at the dollar/TL exchange rate.”

The same expert says, there has been a great demand for dollars all over the world since the beginning of Russia’s invasion of Ukraine. The Dollar Index, which tracks the value of the dollar against six strong currencies, has passed the long-unseen 97 level and is moving towards the 100 level last seen at the beginning of the pandemic.

Is it possible to keep the dollar under 14 TL while it is rising all over the world?

Same expert believes that the cost of this effort will increase day by day and the Central Bank will have to allow the dollar to rise in a controlled manner, adding “It’s hard to come up against a dollar that is going to rise around the world. Therefore, we can see that the Central Bank is gradually increasing its target at the dollar/TL exchange rate.”

So if the dam that the Central Bank has set up for TL 14 is knocked down, will the dollar rise to the levels seen in December, up to TL 17-18? The same analyst says the rise will not be so drastic because there is no short-term foreign capital left in Turkey, that is, hot money.

Morgan Stanley for instance expects the dollar to continue its rise after completing this month at $ 14.75 and reach $18 at the end of the year.

What if the economic administration does not open the lid of the pressure cooker, tries to stand in the face of the global dollar wave with its entire reserve?

The more the upward movement in the dollar /TL with the market’s own dynamics is delayed, the more likely the pressure cooker will explode. In other words, the correction movement that will need to be realized in the dollar / TL, will be harder.

SOURCE: halktv.com.tr/makale/dolarda-14-tl-gecilmez-savunmasi-ne-kadar-dayanir-666590? (translated/edited)