What matters on Friday, January 27

The Central Bank stuck to its forecasts for a sharp drop in inflation yesterday, saying the increasing predictability of the lira’s exchange rate plus financing support meant there was no longer the basis for large price rises, according to Reuters. Presenting a quarterly economic report, the bank’s Governor Sahap Kavcioglu stood by previous year-end annual inflation forecasts for 2023 and 2024 of 22.3% and 8.8% respectively. Kavcioglu, who has slashed interest rates from 19% to 9% over the last year, said data were confirming the slowdown and monthly rates were getting closer to historical averages too. Pricing behavior should follow, he added.

The Central Bank removed the interest rate upper limit for the FX-protected TRY deposit account (KKM) transactions in which the bank is the opponent party. The policy rate stands at 9% while the KKM interest rate had a 12% upper limit. Alpaslan Cakar, Chairman of the Turkish Banks Association (TBB) said the return from the part of KKM to be converted from FX may reach 17%. Cakar also added that the need for options will disappear after this implementation.

The Energy Market Regulatory Authority’s (EPDK) decision to reduce the free-market electricity price cap will enter into force on February 1. While the minimum price limit has become TRY 0 per megawatt-hour (MWh), the maximum price has been decreased from TRY 4,200 to TRY 3,650 MWh. The electricity bill of the manufacturing industry is expected to fall by 12% in February.

Turkey’s benchmark stock index ended yesterday at 5,231.02 points with a decrease of 1.26%. Borsa Istanbul’s BIST 100 index lost 66.75 points from the previous close with a daily trading volume of TRY 90.4bn. Although the risk appetite rose in the global markets after the U.S. growth data was better than expected, the direction was sought in the BIST 100 index after the Central Bank remained its inflation forecast steady, according to analysts. They also said 5,100 points will be the support level and 5,350-5,550 points will be the resistance level for the BIST 100 index, in technical terms.


No important data will be released in the country.


>> The Central Bank’s international net reserves surged by USD 1.8bn to USD 26.71bn in the week ending on January 20, compared to the previous week. The bank’s gross reserves increased by USD 1.5bn from USD 127.3bn to USD 128.7bn in this period.

>> Residents’ FX deposit accounts declined by USD 616m in the week ending on January 20, compared to the previous week, according to parity-adjusted data from the Central Bank.

>> Foreigners’ net equity and corporate bond outflows amounted to USD 330.9m and USD 1.8m, respectively, while their government debt securities acquisitions totaled USD 2.1m in the week ending on January 20, according to the Central Bank.

>> The banking sector’s total loan volume jumped TRY 34.41bn to TRY 7.71tr and its total deposits rose by 0.4%, to TRY 9.12tr in the week ending on January 20, compared to the previous week, according to the Banking Regulation and Supervision Agency (BDDK).

>> The total amount in FX-protected TRY deposit accounts (KKM) has stood at TRY 1.38tr as of the week ending on January 20, according to BDDK.

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