What matters on Tuesday, December 14

USD/TRY, which rose by over 4%, broke another record at 14.60 in midday yesterday before the Central Bank intervened in foreign exchange (FX) markets. TRY gained its losses back and fell below 13.80 towards the end of the day. USD/TRY is traded at 14.22 this morning.

The CB intervened in FX markets for the fourth time due to unhealthy price formations since December 1, after USD/TRY approached 14.00. As it hit 14.60 yesterday, the bank directly intervened in the market via selling transactions. An individual and corporate demand of USD 350-400m were received since the intervention started this month, according to daily DUNYA. The CB’s intervention is estimated to hover around USD 1bn yesterday, while the previous three total nearly USD 1.5bn.

The Central Bank’s Monetary Policy Committee Meeting (PPK) to convene for the last time this year in the shade of TRY devaluation by 42% over the past 30 days and by 86% since the beginning of the year. The majority of economists and international financial institutions estimate an interest rate cut. 12 of 13 institutions that participated in Reuters’ survey expect the CB to lower the policy rate by 25-200 basis points.

Deutsche Bank estimates a 100-basis point interest rate cut this week. But it also said the bank may hike the rate to 25% towards the end of 2022 due to the market conditions including dollarization, weak TRY, and rising inflation.

Before the PPK meeting, President Recep Tayyip Erdogan convened with the new Treasury and Finance Minister Nureddin Nebati, the CB Governor Sahap Kavcioglu, and general managers of the public banks. No statement was made after the meeting, which continued for more than five hours.


House sales increased by 59.0% to 178,814 in November, compared to the same month of the previous year, according to the Turkish Statistical Institute (TurkStat).

The Producer Price Index of Agriculture Products (Agriculture-PPI) rose by 24.35% in November, compared to the same month of the previous year, according to TurkStat. Agriculture-PPI also surged by 4.57% on a monthly basis.

The Ministry of Treasury and Finance will reissue 9-year (3,451 days) maturity CPI (Consumer Price Index) indexed government bond while it will directly sell a 2-year lease certificate.

The first four items of the legislative proposal on the Central Government’s 2022 Budget and the 2022 budget of Presidency and affiliated institutions will be discussed at the Parliament.


>> Strained interventions in prices increase the cost of risks

The government has funded banks with negative interest rates and met the borrowing need by paying higher interest rates for this funding for three months. The CB lowered the policy rate by 100 basis points in September, 200 basis points in October, and 100 basis points in November. Our Editorial Coordinator Talip Aktas examines the reflection of these interest rate cuts on public borrowing.

>> Isbank to serve startups with its entrepreneurship branch

Turkiye Is Bankasi (Isbank) has officially launched its Istanbul Entrepreneurship Branch. The branch, which differs from the traditional bank branch with a different design and customized service model, will serve startups and entrepreneurs, Isbank General Manager Hakan Aran tells.  

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