USD/TRY, which ended last week at 16.42, reached 16.60 yesterday, the highest level after the FX-protected TRY deposit account (KKM) was announced on December 20, 2021 to prevent the sharp foreign exchange (FX) rate increase by making TRY deposits more attractive. EUR/TRY tested above 17.80 and saw its highest level in the last six months. USD/TRY and EUR/TRY are traded at 16.71 and, 17.95 respectively, this morning.
In the meantime, statements of the Treasury and Finance Minister Nureddin Nebati created a repercussion in the markets. Touching on the Central Bank’s interest rate decision, which is debated against increasing inflation, Nebati said: “We could have increased the interest rate to decrease foreign exchange rates. But then, production would have adversely been affected. We’ve decided to grow with inflation. Excluding low-incomers, manufacturing companies and exporters make a profit from this system. However, we will make regulations for low-income citizens to increase their income.” Nebati also added that no interest rate cut or increase is considered, and that annual inflation will end this year at 48-49% and 2023 at 19.9%.
On the foreign policy side, the U.S. Department of State stated that they will closely watch Russian Foreign Minister Sergey Lavrov’s visit to Turkey and will talk to Ankara about the meeting. “I don’t know if we should expect breakthroughs. Of course, we will be watching closely and will be talking with our Turkish allies after that visit. We are supporting all diplomatic efforts that are carefully and closely coordinated with or without Ukraine, that have potential to increase Ukrainian exports of food and fertilizer to the global marketplace,” spokesman Ned Price said. Foreign Minister Mevlut Cavusoglu previously announced that Lavrov will visit Turkey on June 8 to discuss opening a security corridor on the Black Sea to address the wheat, grain, and fertilizer issue.
The Parliament will continue to discuss the legislative proposal for amendment of the Attorney’s act (3.00 p.m.).
The Treasury and Finance Ministry will reissue a 6-year (2,289 days) maturity floating rate note and a 10-year (3,612 days) maturity semiannually fixed coupon bond.
The Treasury and Finance Ministry will release cash realization figures for May (5.30 p.m.).
>> The Consumer Price Index (CPI)-based real effective exchange rate (REER) dropped by 1.21 points from 56.83 to 55.62 in May, compared to the previous month, according to the Central Bank.
>> The KKM has increased dollarization in deposit accounts in the banking sector. Excluding the KKM, the share of TRY deposits in total deposits fell from 37.35% to 28.15% in the week ending on May 27, compared to the first week when the KKM started to be implemented, according to the Banking Regulation and Supervision Agency (BDDK).
>> The Dutch automotive company Stellantis Group has decided to manufacture its new Fiat Doblo model at its Vigo production plant in Spain. The company previously manufactured Fiat Doblo at the carmaker Tofas’ Bursa plant. Tofas will demand to last the production of the vehicle until the end of 2023.
>> The Central Bank’s Monthly Price Developments report said the surge in the May inflation stemmed from the increase in food and energy prices and the hike expanded across the sub-groups.
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