Interest rates, which are implemented for deposit accounts, government debt securities (GDS), and all loans hit a 3-year high. The situation shows that the Central Bank’s policy rate is far from directing the market, according to Batuhan Ozsahin, Investment Strategist of Ata Yatirim. Some measures such as inflation-indexed savings products and value-added tax regulations will be taken to eliminate tightening in TRY and ease the markets in the coming days, Ozsahin said. However, their adoption and support to rebuild trust in TRY seems difficult in the short-term. None of the TRY instruments provide a return over inflation and devaluation excluding Borsa Istanbul, which paves the way for investors to choose the right equity.
On the other hand, the Federal Reserve (Fed) may increase the interest rate four times this year, according to some institutions. Developments in the U.S. job market points out that inflation will continue to have an upward trend for the next period according to Baris Urkun, Research and Corporate Finance Manager of Ahlatci Yatirim. Inflation to be announced this week is critical in terms of the Fed’s decision.
Considering these developments, the strong pace in USD may pressure on the currencies of developing countries including TRY, said Urkun. The strong outlook of USD and the inflation abroad prevent the downward movement of foreign exchange (FX) in terms of the support implemented for TRY deposits.
In the meantime, the amount of the FX-protected TRY deposit accounts has increased from TRY 28.2bn to TRY 107.6bn as of December 24, according to Treasury and Finance Deputy Minister Mahmut Gurcan. USD/TRY hovers around 13.77 this morning.
The current account balance posted USD 2.68bn deficit in November, according to the Central Bank. The 12-month current account deficit totaled USD 14.26bn in the same period.
The Construction Cost Index (CCI) rose by 7.94% in November, compared to the previous month, according to the Turkish Statistical Institute (TurkStat). The CCI surged by 48.87% on an annual basis.
The Banking Regulation and Supervision Agency (BDDK) will release balance sheet and income statements of leasing, factoring and finance companies for January-November 2021. (2.00 pm)
The Parliament starts to discuss the Private Pension Savings and Investment System Law and the legislative proposal on amendment of some laws.
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