Negative real interest rates make TRY more vulnerable against USD, which has strengthened with the Federal Reserve’s monetary tightening policy, according to Piotr Matys, Strategist of the UK-based InTouch Capital Markets. Matys emphasized that many economists and analysts contend that the real inflation is significantly higher than official data and that the market might act with suspicion towards inflation figures following the dismissal of the Former Turkish Statistical Institute (TurkStat) President Prof. Dr. Sait Erdal Dincer. Matys, who also pointed out the erosion in institutional standards and lack of credibility, said TRY will be under pressure as long as uncertainty continues. “If foreign investors don’t trust in the official data, they will be unwilling to acquire Turkish bonds and equities. If there are no new capital inflows, TRY will weaken against USD and the high course in inflation will prolong,” Matys added.
The reduction in the natural gas supply cut, which was 40% last week and has been reduced to 20% as of this week, couldn’t remedy energy-intensive industries. Manufacturing plants are still not fully operating, especially in the iron and non-ferrous metals, glass, ceramics, and cement industries, while concerns continue over the safety of furnaces that run intermittently. Sector representatives are seeking optimization to maintain natural gas quotas of production plants and they expect natural gas supply cuts to be gradually decreased to 10% immediately. In the meantime, many industrialists who suffer from natural gas supply cuts have started to change their furnaces from natural-gas-fired furnaces to coal-fired furnaces.
On the other hand, business world representatives and notable industrial organizations point out that small and medium-sized manufacturing plants in energy-intensive sectors have taken action to generate their own energy. The demand has increased for solar energy systems, which have a short installation period, due to increasing energy prices and problems in energy supply. Apart from decreasing high costs, these investments have also accelerated due to the impending green energy transformation, according to representatives.
Turkey reported more than 100,000 coronavirus cases yesterday, the highest single-day figure in the country since the beginning of the pandemic. Some 102,601 new coronavirus cases and 198 deaths due to the COVID-19 were reported in the last 24 hours by the Health Ministry. Turkey ranks 11th among 192 states with the highest number of COVID-19 cases (over 11.72 million in total), according to the Coronavirus Resource Center at John Hopkins.
Trade Minister Mehmet Mus will announce foreign trade figures for January (11.30 am).
The Central Bank will release FX assets and liabilities of non-financial companies (2.30 pm).
The Parliament will convene to discuss issues on the agenda.
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