It’ll be enough to manage until the election!


The election will be held in four or five months. A lot of promises will be given. Although it’s normal if the opposition gives promises, weird things happen in Turkey and the government can show the same approach.

But there are also calculations made by the government. Their basic starting point is clear. “The economic course shouldn’t deteriorate until the election. Inflation is the most important factor to deteriorate it. FX rates are the most important factor to push inflation. As inflation will decline with the base effect, it will be fabulous for us to make this more significant with the decrease in prices,” they think.

The decline is possible in some items and consumption groups. It even happened when prices broke a record. That’s why the decline should be generalized. The decrease in the Consumer Price Index will be the best indicator of this.

The rate of annual increase will decrease even if nothing is done, the high price increase is prevented at least. But the decline in prices is desired so that the decrease in annual rate will be more significant. Steps have already been taken for this.

The problems such as the difficulty experienced by exporters, hikes in the foreign trade deficit, and current account deficit, shouldn’t be expected to be cared about in this period.

There is only one goal… FX rates shouldn’t rise and an adverse situation to deteriorate inflation shouldn’t emerge!

Thanks to friends! They give some money. The Central Bank (CB) holds the FX rate hike by taking the risk of transferring the money from one pocket to another.

The FX rate will hover at this level until the election. Otherwise, all balances will be upset, and all claims will be refuted.

The first and basic condition for citizens to head towards FX is holding TRY. Where will this TRY be found? There are two sources: The FX-protected TRY deposit accounts (KKM) and TRY deposits at banks.

The total amount in KKM declined by TRY 93bn in the weeks ending on December 24 and January 6. The figure rose by TRY 3.4bn in the week ending on January 13 after the CB gave green light to the optional KKM that it previously prevented. Thus, the necessary TRY door to buy FX has been closed for now.

What if TRY deposits in banks start to decline and the money goes to FX? A decision, which is controversial whether it works or not, was taken to prevent this. Reserve requirement ratios for TRY deposits with a maturity longer than three months were lowered to zero. If the risk of a shift from TRY deposits to FX is observed, another regulation for deposits can be added to the agenda.

Residents’ FX deposit accounts (DTH), which declined by USD 27.7bn in November and December, rose by USD 3.2bn in the first week of this year. The figure rose by USD 646m in the weeks ending on January 6-13, according to the parity-adjusted data. The visible hike amounted to USD 3.4bn in DTH, USD 2.8bn of which stemmed from the parity effect.

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