Business is booming.

How much was the dollar? (May 23, 2022)

0 20

The information agenda, especially the cabinet meeting, the last auctions of the Treasury’s borrowing program for May, and the market participants’ survey, will be followed today. CBRT interest rate decision, Moody’s Turkey probable rating assessment and Davos Hill will be watched throughout the week.

It will be followed whether the demand for foreign currency can be reduced with steps such as short-term high-yield bonds and inflation-indexed bonds in the markets, or whether new foreign exchange resources can be provided to the public through these procedures.

Another instrument followed in this context is the inflation-protected bond that the Treasury plans to issue. While the government has announced that it has completed its preparations for the inflation-protected bond, the issue that if the new product is attractive, it may lead to an escape from TL, foreign currency and even KKM deposits creates a fuss for the banking department .


The main reason for questioning the sustainability of the exchange rate policy, which the market defines as publicly controlled, is the fact that the CBRT’s reserves continue to erode despite the need for more and more foreign currency to maintain its current foreign exchange policy. The CBRT’s reserves excluding swaps have also decreased to minus 52 billion dollars.


In the report published this morning by Istanbul Analytics, “The CBRT, which maintained the new defense limit of 16 in USD/TL throughout the week, paid a very high price. According to the data and anecdotes we obtained from various sources, it may have sold 1 billion dollars of foreign currency per day. After all, the CBRT’s The reserves that can be used for the intervention should have decreased to less than 30 billion dollars,” he said, adding:

“For the CBRT, the net foreign currency inflow will be through tourism revenues. This amount will be 5 billion dollars a month at the most in the June-September period. Despite this, the CBRT still sells foreign currency four times this inflow per month for intervention. We can even see from this arithmetic that the end of the game is very close.”


TL has lost approximately 8% of its value against the dollar since the beginning of the month. Whether the public will allow the continuation of the depreciation in TL is the main agenda item in the markets.

Dollar/TL followed a horizontal course for two months in the middle of 14.5-15 until the first days of this month. Then, with a continuous rise, the exchange rate approached 16, but now it did not test above this level.

Even though the CBRT adds 40% of the exporter’s foreign exchange income and the foreign currency part of the KKM application to its reserves, the bank’s reserves do not increase at the same rate. The difference in the middle is the currency used for “stability” as defined by the government. While the CBRT does not officially accept its interventions in the exchange rate, it describes the movements as a floating exchange rate regime.


Dollar/TL started the first trading day of the week under 16 quickly. The exchange rate traded at 15.9500/15.9600 at 08:51 this morning.

While the dollar was trading at 15.9608, the lowest was 15.8962 and the highest was 15.9720 during the day.

Strong selling pressure and risk aversion due to recession in global markets are also in the middle of the agenda items.

CDSs, which show the cost of defending Turkey’s five-year debt against bankruptcy, exceeded 724 points last week, reaching a record level since 2008, according to Refinitiv data. CDS ended Friday at 715/724.

While the obvious rise in CDS, which is an indicator of the risk of assets in Turkey, increased the Treasury’s dollar borrowing costs, bankers pointed out that costs approached double digits.


In addition, after Turkey said that it would not approve Finland and Sweden’s participation in NATO, relations with the West were also included in the developments followed.

Leave A Reply

Your email address will not be published.