Foreign exchange rates will stabilize, and Turkey’s risk premium will decrease as fight against inflation continues in a determined and wholistic approach, according to Treasury and Finance Minister Lutfi Elvan. “By the support of these, the long-term interest rates will decline and predictability for investments will increase,” Elvan said in a speech at the 5th Turkish Capital Markets Congress.
Stressing that price stability is the preliminary condition to sustain the projected growth, the Treasury and Finance Minister said: “On the inflation front, we aren’t at the level we desire. Apart from supply-demand driven reasons, inflation has a deteriorating structure through pricing behaviors and expectations. The policy set to be implemented to each root causes must be differentiated. That’s why each institution should do its part within the scope of their areas of responsibility.”
In the meantime, TRY continues to devaluate due to ongoing concerns over inflation and monetary policy and global appreciation of USD. USD/TRY, which has showed an upward trend since the first week of September broke another record at 10.44. USD/TRY yesterday and is traded at 10.42 this morning. Central banks in many developed and developing countries tighten monetary policies due to rising inflation, while Turkish Central Bank eases the monetary policy despite the inflation increase and TRY depreciation causing a decline in purchase power of residents.
Market players estimate the Central Bank to lower the policy rate by 100 basis points to 15%, according to the recent surveys. Moreover, the markets expect another interest rate cut in December and ending the year with a 14% policy rate.
DAILY AGENDA
The Central Bank will release short-term external debt statistics for September (10.00 am).
The Parliament’s Planning and Budget Commission will discuss the 2022 budget of the Trade Ministry.
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