The most used word has been tapering in the financial markets in the recent period. While the markets try to tolerate the news that the Federal Reserve (Fed) will start tapering by the end of the year, the European Central Bank (ECB) prepares to take the same step. Analysts said last week to CNBC that the ECB may make a statement in this direction in December.
How will tapering affect Turkey? The previous precedent should be examined in order to see its impact on the country, according to daily DUNYA columnist Servet Yildirim. He said May 22, 2013, was a turning point for markets and economies. Because, the Fed Chair of the period Ben Bernanke said that the Fed may decrease bond tapering and took the first step to exit from ultra-easy monetary policy process implemented by the bank for five years. USD/TRY was 1.8, while the Central Bank’s policy rate was 4.5% and inflation stood at 6% before Bernanke’s statement. These levels have never been seen after he delivered his speech and the Fed started to gradually implement its withdrawal plan.
Yildirim says that Turkey may experience a new shock if tapering begins. Because Turkey, which has high vulnerabilities, high inflation, strong dollarization, low foreign exchange reserves and has low currency prestige, relies on external resource inflow to grow. What needs to be done is that economies should structurally be made resilient against such shocks, Yildirim warns, inflation pressure should be eased, external finance dependence should be decreased, dollarization should be removed, prestige of the monetary policy should be raised, reserves should be strengthened, and political vulnerabilities should be reduced.
But as of today, USD/TRY, which tested above 8.50 for the first time after August 20 yesterday, hovers around 8.43-8.45 this morning. EUR/TRY is traded at 9.98 with a slight increase.
Gold prices show a steady trend due to decrease in USD and uncertainty about when the Fed starts bond tapering. Spot gold reaches USD 1,801 per ounce with a limited upward movement.
Although oil prices increased this morning by the support of supply decrease in the U.S. after Hurricane Ida damaged offshore production plants, they prepare to close the week nearly with a 1% loss with the impact of decline yesterday after China stated that it plans to sell crude oil from its strategic reserves. Brent crude rose by 1.16% to USD 72.28 per barrel.
The seasonally adjusted unemployment rate rose by 1.4 points to 12% in July, compared to the previous month, according to the Turkish Statistical Institute (TurkStat).
The Construction Cost Index rose by 44.76% in July, compared to the same month of the previous year, according to TurkStat. The index increased by 2.56% on a monthly basis.
The overall export unit value index increased by 14.6% while the overall export volume index dropped by 3.8% in July, on an annual basis, according to TurkStat. The overall import unit value index surged by 30.3% while the overall import volume index fell by 10.3% in the same period.