Why did dollar/TL rate break a new record? What do experts say?

Dollar/TL parity has broken a record with 8.60 today. Economists explain the reasons for the rise in the exchange rate and its possible consequences.

The depreciation of the TL accelerated today. The record of 8.57 just before the change in economic management on November 6 was surpassed. The new record was 8.61 and the euro/TL was 10.47.

It is commented that CBRT does not make a strong policy direction. Added to that is the tension in politics.

An expert said that the main reason for the depreciation of the dollar was domestic dynamics and pointed out that the depreciation of the dollar had been 16 percent since Naci Agbal was removed from his position at the Central Bank, and the dollar was separated from currencies of similar countries.

Companies will pay down debt repayments in June. So there are heavy foreign currency demands, and this adds to other existing vulnerabilities. If the rate rise continues like this, it may be difficult to keep inflation at 17 percent. The government, on the other hand, can approach interest rates as part of supporting growth, not lowering inflation.

RATE ABOVE 8.50 WOULD BE RISKY

Although the real interest rate is higher than similar countries, as can be seen, it is considered to be enough. If interest rates need to increase, they should be increased, not speculated, creating uncertainty.

If the exchange rate is accepted as normal above 8.50, it would mean entering a new band, ,n other words an upward risk would emerge. Also, the high exchange rate would raise inflation.

BLOOMBERG POINTS TO INFLATION AND DEBT PAYMENTS

Bloomberg announced the record in the dollar/TL to the world with the headline “the TL fell to a record low as local foreign exchange demand is added to inflation concerns.”

It said monetary policy was too loose to rein in inflation growth, putting pressure on the dollar, which pushed up the rate of foreign exchange purchases for companies to repay $ 6.9 billion in debt in June.