Between the parties after Russia’s invasion of Ukraine The highest level conference will be held in Turkey today. Ankara turned his attention to the possibility of a conference to create a turning point that would bring peace, but Ukraine said expectations from the conference were weak, but still wanted a ceasefire.
The January labor force statistics released by Turkstat in 1000, the weekly data on the CBRT in 1430, and the daily decline and rise in oil prices of over 10% are the main ongoing developments in the market.
It was difficult to find foreign currency in the market due to the growing needs of companies for foreign currency and the sale of foreign currency to the general public by CBRT, but as the demand increased, the interest rate of foreign currency deposits increased from 0.5% to 1% to 3%. I’m getting closer.
Inflation has already exceeded 50% and is expected to rise to 65% in the coming months, with record increases in energy costs raising concerns about economic policy.
Oil is approaching $ 115
Crude oil prices soared after the United States imposed sanctions on Russian oil, almost doubling prices in early December. The closest futures barrel price for Brent crude was $ 139.23 on Monday, but fell most sharply in almost two years, down 13% this morning and rising to nearly $ 115 this morning.
Oil prices are rising today following yesterday’s sharp fall, but markets are assessing how to close the supply gap that arises after sanctions against Russia, which invaded Ukraine.
For Turkey, which imports almost all of its energy, the cost of energy was the first and most important area of the Russian crisis. Turkey’s energy bill breaks records by surpassing $ 8 billion per month, but central bank reserves are increasing each month.
The rising energy costs and the fact that they are filled with reserves raise concerns about Turkey’s current surplus-oriented economic policies.
Foreign exchange sales to state-owned economic enterprises (SOEs), which the central bank expanded at the beginning of the year and played a key role in the decisive role of the people in the foreign exchange market, reached a record level of $ 5.37 billion in February. Reached. Therefore, only in the last four months, the $ 15.1 billion foreign exchange demand of state-owned enterprises (mostly created by BOTAŞ) was met directly from the CBRT reserve without entering the market.
As of January, CBRT began to follow a more aggressive exchange rate policy, with both a decline and an increase in foreign exchange reserves. Analysts describe the new order as a more publicly controlled exchange rate policy.
Consumer inflation rose to 54.44% in February, but economists have raised their peak forecast from 55% to 65%, indicating that further revisions are underway. Given the CBRT’s 14% policy rate, the fact that the negative real interest rate approaches 50 points in the coming months is another important reason for increasing risk.
Economic administration is expected to take steps to limit rising inflation through budget channels. However, the impact of this on the peak of inflation is expected to be limited, and the first significant decline in inflation is expected to occur in November 2022, along with the underlying effects.
Meanwhile, the dollar / TL started to rise again after falling below 14. TL, which lost 44% of its value last year, has been moving in a more stable direction since the beginning of the year.
The exchange rate was 14.6310 / 14.6850 at 08:36 after rising to 14.6880.
CBRT’s net foreign exchange reserves were $ 18.2 billion, down $ 1 billion as of last week, according to calculations made by bankers from key data. The data will be announced today at 14:30.
Meanwhile, local foreign currency deposits last week were calculated to decrease by $ 200-2.5 billion, which is expected to be weighted by the parity effect, not the exchange rate. In the last week of February, when personal concerns about Russia and Ukraine became apparent, the largest weekly increase in foreign currency deposits since the end of December, when the currency protection deposit system was announced, was $ 1.22 billion. Whether the process will continue as foreign exchange demand is carefully monitored.
Benchmark 10-year bond yields rose to a record high of 26.82% this week and were 25.73% in yesterday’s previous trading.
Turkey’s five-year CDS closed the day yesterday with 648/663 basis points after surpassing a record 700 basis points this week.
In addition, the system’s operation, which went into operation last week, aims to bring $ 25 billion to the system in the first place, and the impact of the expansion of the currency protection deposit system will be monitored.