While TL has lost 2.6% of its value against the dollar since the earthquake, the election agenda is followed by the changes that the Central Bank (CBRT) has made in the last year to hundreds of regulations.
While the CBRT set targets for the banking sector to convert from regular foreign currency to TL every month by 5% in deposits for the next six months, it also asked the sector to focus on these targets.
The CBRT’s current messages also include “Avoid yourself before you prevent the applications that will create foreign exchange demand by circumventing the regulations”.
Bankers point out that the messages of the CBRT for the period that will also include the elections on May 14 are perceived as “do not create an obstacle in foreign exchange policy by creating foreign exchange demand”.
As the election approaches, the depreciation of TL in the market, which bankers define as publicly controlled, accelerates daily compared to the period before the earthquake, but is still at very limited levels.
Continuing its limited daily losses, the dollar/TL was traded around 19.32 at 0843 this morning, while elections and political developments are followed as the main agenda item in the markets due to the radical changes it may bring.
In this context, the AKP’s election manifesto and parliamentary candidate introductory meeting were followed this week. It was stated in the declaration that single-digit inflation, budget discipline and free market economy would be taken as basis.
Although there are those in the market who think otherwise, the expectation that more conventional policies will come to the fore, no matter who wins after the elections, has increased. Despite this expectation, it is not thought that there will be a change in public-controlled policies until the elections.
Currently, the interest given by banks to high-volume TL deposits is between 30%-35%, while banks that want to meet new targets increase the interest they give to TL deposits and KKM accounts. The average deposit interest for up to three months increased to 29.23% as of the beginning of the month, reaching the highest levels of 20 years.
The increasing views that the dollar/TL is priced lower than it should have been before the elections and that the TL should depreciate, increases the interest in foreign currency. Exporters, on the other hand, demand new depreciation in TL from the public as they lose their competitiveness.
Bankers predict that all the steps taken by the CBRT in the recent period have the common aim of reducing the foreign exchange demand or increasing the foreign exchange inflow to the country, and that similar steps may continue until the elections.
Today, the internal data agenda includes the CBRT’s foreign loan debt of the private sector, weekly money and bank, foreign exchange reserves and securities statistics for February. The two bankers Reuters referred to their calculations calculated that for the past week, gross reserves will be around $1 billion, with net reserves falling more markedly.
Asian stocks slumped amid sell-off in tech stocks in Hong Kong, while the dollar came under pressure and prices of short-term government bonds rose after US consumer price data showed inflation eased.
In global markets, the dollar struggled to recoup its losses after US consumer inflation data rose below expectations, boosting risk appetite and boosting expectations that the Fed will end the monetary tightening cycle after a final interest rate hike in May.