The sustainability of economic policies, especially the exchange rate, continues to be questioned in the markets.
Bankers stated that the decline in the exchange rate, which started from levels close to 16 yesterday and continued until 15.7, occurred with the expectation that a work such as an inflation-protected bond that could bring new foreign currency to the public was announced at the cabinet meeting, and that after this expectation did not come true, there was an increase in the exchange rate again in the evening hours.
After the fluctuation, the dollar/TL started the day at 08.55 this morning at the level of 15.97/15.98. The dollar is currently trading at the level of 15.9842.
Bankers draw attention to the acceleration of reserve losses in the foreign exchange policy, which they define as publicly-controlled. Analysts point out that there are many developments that challenge foreign exchange stability, especially high power imports, and in this context, the sustainability of the exchange rate policy is the main source of anxiety in the markets.
With the prestige of May 13, the CBRT’s total reserves fell below $102 billion, and international net reserves fell to $11.5 billion. Reserves excluding swaps, on the other hand, declined to minus 52 billion dollars in the same period and once again approached minus 60 billion dollars, which brought about major political and economic changes before.
Even though the CBRT adds 40 percent of exporter’s FX revenues, service exports a portion of its FX revenues, and the FX portion of the KKM application to its reserves, the bank’s reserves do not increase exactly. 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.
All three traders, whose calculations Reuters referred to, stated that the daily reserve loss of the CBRT has accelerated significantly, exceeding 0.5 billion dollars per day in the last 1 month. In this context, the net reserve, which will be announced this week, is expected to decrease to 10 billion dollars or one measure below.
The Turkish lira has lost approximately 8 percent of its value against the dollar since the beginning of the month. Whether the public will allow the continuation of the loss in TL is the main agenda item in the markets.
In this context, it is monitored 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 and whether new foreign resources can be provided to the public currency from abroad.
Saudi Arabia’s Crown Prince Mohammed bin Salman’s soon-planned visit to the countries in the region, where Turkey is located, is also being watched for outsourcing.
CDSs, which show the cost of protecting Turkey’s five-year debt against bankruptcy, exceeded 724 points last week, reaching a record level since 2008, according to Refinitiv data. CDS closed yesterday at 700/707. Bankers point out that the rise in CDS has brought the Treasury’s dollar borrowing costs closer to double digits.