Banks, which have been tested in terms of the balance sheet by the successive decisions to maintain negative interest rates, have raised the interest rate charged for commercial loans by 3.18 points to 16.1%. The figure, which hits a 4-month high, imposes an obligation to hold the Treasury bond with a record negative interest rate of 20%. If the rate will exceed 17% for commercials, the banks will have to hold additional security of TRY 90 per TRY 100 loan they provide. The sector representatives point out their tendency to turn off the ‘loan tap’ instead of putting up with additional provisions.
Istanbul Ferrous and Nonferrous Metals Exporters Association (IDDMIB) Chairman Cetin Tecdelioglu said the loss caused by the earthquake has reached 25-30% in the domestic market, and 8% in exports. “It’s wrong to fully link the decline in exports with the earthquake. The FX rate policy, high-interest rates, and energy prices at uncompetitive prices adversely affect us. The interest rate-FX policy must be improved for exports to recover,” Tecdelioglu said, stressing that the current FX rates create difficulties in new orders. Moreover, Reuters reported that Tecdelioglu said the government handed companies a list of banned foreign goods and instructed them not to transship those to Russia beginning on March 1. “Any goods on that list are blocked from Russia no matter which country they come from,” he added.
The European Commission yesterday pledged EUR 1bn for the reconstruction of regions hit by the massive earthquakes in Turkey on February 6. Donors at a European Union-led conference yesterday pledged EUR 7bn to help to rebuild Turkey. Foreign Minister Mevlut Cavusoglu said EUR 1.75bn of the figure is a grant and around EUR 4.3bn is an affordable loan.
Turkey’s former Deputy Prime Minister and Finance Minister Mehmet Simsek twitted that he isn’t interested in active politics. “I am ready to provide the necessary support in my area. But due to my work at foreign financial institutions, I am not thinking of going into active politics,” Simsek added.
The Central Bank is expected to hold the policy rate at 8.5% this week after it eased policy last month following earthquakes, according to a Reuters poll. The poll also showed that a minority of economists expect another rate cut. Later in the year, rate hikes are expected – but the policy reversal will depend heavily on the outcome of landmark elections set for May 14.
Turkey’s benchmark stock index ended yesterday at 4,975.47 points, down 3.13% from the previous close. Starting the week at 5,119.58 points, Borsa Istanbul’s BIST 100 index lost 160.97 points compared to the last week’s close. The index’s lowest value during the day was 4,971.10, while its daily high was 5,137.07. The total market value of BIST 100 was around TRY 4tr by market close, with a daily trading volume of TRY 70bn. The global markets have a fluctuant course as the concerns that the problems may continue in the banking sector continues, according to analysts. They said investors have focused on the developments in the sector and the Federal Reserve’s interest rate decision. Analysts also added that 4,750 points will be the support level and 5,200 points will be the resistance level for the BIST 100 index, in technical terms.
DAILY AGENDA
The Turkish Statistical Institute (TurkStat) will release the Agricultural Input Price Index for January (10.00 a.m.).
Meanwhile…
>> The non-domestic producer price index surged by 48.13% in February, compared to the same month last year, according to TurkStat. The index increased by 0.42% monthly.
>> The net international investment position posted a USD 262bn deficit in January, according to the Central Bank. The figure hovered around USD 274.5bn at the end of 2022. Portfolio investments dropped by 1.1% to USD 92.2bn in January, compared to the end of 2022.
>> The new-generation well-being platform Wellbees launched an office in Dubai. The company opened its first and second offices in the UK in 2021 and the U.S. in 2022, respectively.
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>> The highest monthly CAD in the history of the republic
Our Eco Analysis Columnist Alaattin Aktas addresses the current account deficit in January.
