What matters on Monday, November 22

As everyone knows, the Central Bank’s Monetary Policy Committee (PPK) lowered the interest rate by 100 basis points, from 16% to 15%, last Thursday. Many have focused on the 5-minute delay of the announcement, since the rate cut was expected and, like the murder Gabriel Garcia Marquez pictured in his “Red Monday,” came later than expected. The delay has been explained as a communication failure. However these things are released via a well-planned pathway. It is not a twist in destiny, nor a mistake. The Central Bank is conducting policy against the expectation of market players and is stubbornly defending it. Perhaps we could say that the Central Bank has sound reasons to do so if the consequences of the rate decision had been positive. But there is no sign that at any point it will stop the free fall of the Turkish Lira. The Central Bank is following the orders of President Erdogan and the governor is confident that he will keep his post no matter how his decisions damage the Turkish Lira. There is no economic explanation for this rate cut and efforts to explain it can only be described as “much ado about nothing.” The system is destroying itself.

The economy has turned into something like the Netflix drama “Squid Game.” Everyone knows it is not sustainable for much longer. At some point the President may understand that such decisions will cost him more than the next elections. The rate cut has sent the USD FX rate to more than TRY 11, something unimaginable a few years ago. However, everyone knows that the Central Bank credibility began to erode after the departure of Durmus Yilmaz. His departure was accompanied by the loss of the rule of law, a fact that many foreign economists emphasize. Without a return to fundamental checks and balances and the rule of law, which should above all guarantee the autonomy of the Central Bank, nothing will go back to its factory settings. Otherwise, the economy is going full speed towards a total default. As we emphasized before, the murder is being carried out in broad daylight and our eyes are wide shut. There is not much left to say more on this.

The Central Bank has lowered the interest rate charged for TRY required reserves by 100 basis points in line with the policy rate cut. The step, which is a technical adjustment, won’t affect foreign exchange rates.

USD/TRY, which approached to 11.35 and ended the week at 11.25 last week, decreased by 1.54% to 11.11 this morning.


Turkish Statistical Institute (TurkStat) will release Consumer Confidence Index for November (10.00 am).

TurkStat will release Non-Domestic Producer Price Index for November (10.00 am).

TurkStat will release Labor Input Indices for the third quarter (10.00 am).

The Ministry of Culture and Tourism will release foreign tourist figures for October (11.00 am).


>> On the cover: The new Danish Consul General in Istanbul, Thierry Hoppe, is on our cover this week. He says that he was not just posted here, it was something he was looking for. As a diplomat primarily responsible for increasing bilateral trade for Denmark, he had to promote imports to his country for the first time in his career in order to help Danish companies suffering with supply from the Far East. Since his last post was Beijing as the head of trade at Royal Danish Embassy, no one could be better for this post than Hoppe. Read the full story at pages 14-15.

>> Professor Ilter Turan: European defense dreams. P. 10.

>> Yaman Toruner, Former Central Bank Governor, Former President of Borsa Istanbul and Former Minister of State Responsible for Customs is in our Q&A page. P. 11.

>> Report: Germans to increase investment despite currency risks: Survey. P. 12.

>> Dr. Sibel Zengin: A crisis-hit multipolar world. P. 19.

>> Enerjisa employs ‘artificial intelligence’. You can read the details in our Energy section on page 22.

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