The markets are focused on the Central Bank’s interest decision and statements to be included in the summary of the Monetary Policy Committee (PPK) meeting. As we already stated yesterday, this will also be the first step of the new management in terms of interest and monetary policy stance. But what kind of results does the economy world expect?
Firstly, no interest change is expected which was set as 19% in the previous meeting. The messages to be given after the meeting are expected to be more directive in terms of the monetary policy for the upcoming period. There are four scenarios emerged in this context.
If the policy interest doesn’t change and the ‘tight stance’ is emphasized, the markets will breathe a sigh of relief, which is the most believed scenario by the market professionals. In this case, upward movements in BIST-100 index pricing can accelerate and USD/TRY can withdraw.
If the interest doesn’t change and confusing statements are made, the market is expected to react adversely. Accordingly, the pressure on TRY asset pricing can increase and the possibility of USD/TRY’s decline below 8.00 can be eliminated to a large extent. Hopefully, there will be no question marks in the summary…
What if the Bank increases interest in a modest manner? This is an unlikely scenario. The market professionals think that the market can react to the interest increase in a different way. Even if the interest increase can positively affect TRY at the first stage, it can lead to market reaction as it creates questions about the projected risks.
The upward risks in the headline inflation will remain on the agenda due to the inflationary risk until the first half of the year. That’s why lowering of the interest cut won’t be on the table, according to professionals. However, volatility in TRY asset pricing will increase if the interest rate is surprisingly lowered. Hopefully, the PPK will take the most realistic and beneficial decision for the sake of the country…
Prior to the meeting, USD/TRY fell to 8.05 today, from 8.10 yesterday. EUR/TRY is traded at 9.66. On the other hand, oil prices approached the peak of the month as International Energy Agency (IEA) increased oil demand projections. Brent crude declined to USD 66.32 per barrel today after it increased by 4.6% and saw the highest level since March 17. The U.S. crude oil also rose by 4.9% yesterday and dropped by 0.4% to USD 62.9 today.
Meanwhile, gold prices have slightly increased with the impact of USD’s weak course, which is traded at USD 1,745 today.
DAILY AGENDA
Greek Foreign Minister Nikos Dendias will pay a visit to the country. President Recep Tayyip Erdogan will receive Dendias at 3.00 pm. Dendias and his counterpart Mevlut Cavusoglu will compare notes on regional issues.
The Central Bank’s interest decision will be announced (2.00 pm).
The Turkish Statistical Institute (TurkStat) released house sales statistics for March. Accordingly, house sales increased by 2.4% in March, compared to the same month of the previous year. 111,241 houses were sold last month.
TurkStat also released Paid Employees statistics for February. Accordingly, the number of paid employees increased by 5.6% on annual basis in February, from 12,002,495 to 12,614,757.
The private sector’s long-term outstanding loans received from abroad increased by USD 388m to USD 164.4bn, while the sector’s short-term outstanding loans received from abroad rose by USD 172m to USD 9.9bn as of February, compared to the end of 2020, according to the Central Bank.
The Ministry of Treasury and Finance will release the Central Government’s Budget statistics.
The Central Bank and the Banking Regulation and Supervision Agency (BDDK) will release weekly money and banking statistics (2.30 pm).
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