The Central Bank (CB) holds the first Monetary Policy Committee (PPK) meeting of the year today. The economy world expects the interest rate to remain steady due to the statement of the PPK that the cumulative impact of the policy decisions, which were taken at the December meeting will be monitored. The CB’s policy rate currently stands at 14%.
The CB has lowered the one-week-repo rate by 500 basis points since September 2021. USD/TRY, which hovered around 8.30 prior to interest rate cuts, tested above 18.30. “Considering high volatility in foreign exchange (FX) rates and high inflation, the CB’s interest rate decision is in the spotlight. The decision has gained importance after the tight monetary policy stance expression was removed from the statement and the orthodox monetary policies were replaced by heterodox policies,” said Caglar Toros, Research Specialist of Info Yatirim.
On the other hand, no FX rate fluctuation to stem from unbalanced FX demand will be experienced on the markets, according to President Recep Tayyip Erdogan. Speaking after the Cabinet meeting President Erdogan stated that TRY 163bn has been converted into the FX-rate protected TRY deposit accounts.
Central banks of the United Arab Emirates (UAE) and Turkey signed a bilateral currency swap agreement. According to a statement by the Turkish Central Bank, the nominal size of the deal is mutually AED 18bn and TRY 64bn. The latest deal has been the fourth swap agreement of the country. The total amount of swap deals has reached USD 28bn.
DAILY AGENDA
Non-domestic producer price index (ND-PPI) jumped 87.64% in December, compared to the same month of the previous year, according to the Turkish Statistical Institute (TurkStat). The ND-PPI climbed by 25.92% on a monthly basis.
The Central Bank will announce the interest rate decision (2.00 pm).
The Central Bank and the Banking Regulation and Supervision Agency (BDDK) will release weekly money and banking statistics (2.30 pm).
President Recep Tayyip Erdogan will receive his El Salvadorian counterpart Nayib Bukele (4.30 pm).
The Ministry of Treasury and Finance will release the central government’s gross debt stock figures (5.30 pm).
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