TRY continues to sharply devaluate. USD/TRY exceeded 17.19 yesterday, a one-day increase of 2.6%. USD/TRY has increased by 15.7% since the beginning of May, while the figure has exceeded 28% since the beginning of the year. USD/TRY is traded at 17.20 this morning. Moreover, Turkey’s CDS (credit default swap), which shows the cost of the protection of Turkey’s 5-year maturity debt against bankruptcy, hit a new record high of 768.
The reflection of the sharp foreign exchange (FX) rate fluctuations on inflation will be harsh, according to experts. They say the peak in consumer inflation, which is expected to hover around 85% in the coming months, has risen to 92-93% following the recent FX rate developments. Experts also point out that classical economic theories must be implemented to prevent such sharp movements in FX rates, including a high-level policy rate hike.
On the other hand, the 3-month gain of a depositor who shifted to the FX-protected TRY deposit account (KKM), has exceeded 18.0% and the FX rate increase will pave the way for the Ministry of Treasury and Finance to shoulder an increasing burden.
Alongside these developments, Turkey’s benchmark stock index fell by 4.07% to 2,540.36 points at yesterday’s close. Borsa Istanbul’s BIST 100 Index lost 107.83 points from its previous close of 2,648.19 points. The daily trading volume hovered around TRY 54bn. Analysts said the risk appetite decreased due to concerns over increasing bond yields and oil prices. They also stated that 2,390 points will be the support level and 2,690 points will be the resistance level for the BIST 100 index, in technical terms.
On the foreign policy side, Foreign Minister Mevlut Cavusoglu stated that a United Nations plan to ease a global food crisis by restarting Ukrainian grain exports along a sea corridor was reasonable and requested more talks with Moscow and Kyiv to ensure ships’ safety, according to Reuters. Speaking alongside Russian Foreign Minister Sergei Lavrov, Cavusoglu said their meeting in Ankara was fruitful, also saying that Turkey’s latest diplomatic meetings and Ukrainian President Volodymyr Zelensky’s recent statements indicated there may be a basis for a return to talks.
The Parliament will continue to discuss the Environment Law, which includes regulations for “sea snot” and development, and a legislative proposal on the amendment of a range of laws (2.00 p.m.).
The Banking Regulation and Supervision Agency (BDDK) and the Central Bank will release weekly monetary and banking statistics (2.30 p.m.).
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>> Production-based sales from Turkey’s top 500 firms exceed TRY 2tr
Production-based sales by the country’s top 500 manufacturing companies surged by 73.8% to over TRY 2tr in 2021, compared to the previous year, according to the latest survey results of the Istanbul Chamber of Industry (ISO). The operating profit of the firms included in the ISO Top 500 jumped 139% to TRY 342bn.
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