The Central Bank sold USD 269m worth foreign currency to the Petroleum Pipeline Company (BOTAS) for the first time after five months. The transaction, which was started by the former Central Bank Governor Erdem Basci in 2014 and was suspended during Naci Agbal’s term, has been carried out again with Sahap Kavcioglu.
Considering high volatility of USD/TRY hovering around 8.70 and low transaction volume at markets in recent weeks, penetration of BOTAS in the market by demanding foreign currency could have further increased volatility and price. The bank may have carried out this transaction in order not to increase the volatility according to daily DUNYA finance editor Sebnem Turhan. On the other hand, the bank’s gross foreign exchange reserves exceeded USD 100bn as of June 25. This may have enabled the bank to make the sale.
Experts evaluated this as a move to prevent FX demand in the market while they think that the bank pointed out a policy change. However, we need to see another sale in July so that this can be interpreted as an actual policy change. Another expert emphasized that reuse of non-interest rate instruments may show that the Central Bank is uncomfortable with FX rate level.
Looking at the money market today, USD/TRY is traded at 8.72, while EUR/TRY hovers around 10.29-10.30.
Gold prices declined due to the appreciation in USD as the text of the Federal Reserve’s minutes emphasized inflation pressure and stated that reduction of asset purchasing program is on the carpet. Spot gold dropped by 0.3% to USD 1,797 per ounce this morning after it rose six successive days.
Oil prices decreased due to the concerns over oil supply with the cancellation of the OPEC+ meeting. Brent crude fell by 0.3% to USD 73.17.
DAILY AGENDA
The Export Expectation Index dropped by 4.4 points to 127.6, while the Import Expectation Index surged by 2.9 points to 114.5 for Q3, compared to Q2, according to the Foreign Trade Expectation Survey conducted by the Ministry of Trade.
The Central Bank and the Banking Regulation and Supervision Agency (BDDK) will release weekly money and banking statistics (2.30 pm).
The Ministry of Treasury and Finance will release the average maturity and cost of domestic borrowing as well as total domestic debt rollover ratio for June (5.30 pm).
Foreign Minister Mevlut Cavusoglu and his Finnish counterpart Pekka Haavisto will hold a joint press conference after their meeting.
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