Foreign exchange (FX) rates, which sharply declined with the impact of measures including FX indexed deposit accounts and covered interest rate hike at the beginning of this week, have continued to fall for the fourth successive day. USD/TRY which decreased by 35% in the first three days of the week, tests 11.67 with a 3.03% drop while EUR/TRY sees 13.38.
However, the challenging operating environment, deterioration in domestic confidence, further potential weakness in the TRY amid monetary policy uncertainty and high inflation create risks for macroeconomic and financial stability, according to the international credit rating agency Fitch Ratings. “This is negative for banks’ credit profiles could increase the likelihood of government intervention in the banking system and drives our ‘deteriorating’ outlook for the sector in 2022,” the statement read. Fitch also said the recovery of the TRY and reduced deposit dollarization, if sustained, would be positive for banks, but the scope, impact and implications of the program are uncertain. “Negative real rates, monetary policy uncertainty and inflationary pressures could consequently continue to drive currency volatility in 2022,” the institution noted. “Turkish banks are vulnerable to FX rate volatility due to significant refinancing requirements and deposit dollarization, both of which create risks for FX liquidity, and high sector foreign-currency lending, where a weaker TRY can negatively affect asset quality,” it added.
The Financial Stability Committee will convene under the presidency of Treasury and Finance Minister Nureddin Nebati (11.00 am).
The Central Bank will release the summary of the Monetary Policy Committee meeting, which was held on December 16 (2.00 pm).
The Central Bank and the Banking Regulation and Supervision Agency (BDDK) will release weekly money and banking statistics (2.30 pm).
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TRY devaluation, which is at the top of the agenda in Turkey, is harming almost all fields. However, our Tourism columnist Fehmi Kofteoglu says it has positive aspects in tourism.