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Latest situation in the markets: How much was the dollar? (26 May 2022)

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All of the economists participating in the Reuters survey expect the CBRT to keep the policy rate constant today.

While bankers continue to question how to stabilize the exchange rate, which they describe as government-controlled, without a new source of foreign currency, the dollar/TL has now almost reached the level of 16.5, which IIF calculates as a fair price. IIF Chief Economist Robin Brooks said yesterday that there is an increased likelihood that its fair value will be exceeded.

Despite the risks it will create in the markets, it continues to be watched when the inflation-indexed Treasury bond, which is claimed to aim to bring the personal foreign currency savings of approximately 140 billion dollars to the public, will be put into use.


Güldem Atabay from Istanbul Analytics said, “It is difficult to explain, but while the TL is losing price, the authorities who should have prevented it are only watching. Although the ‘back door foreign exchange sales’, which are now in the literature for literature Turkey, continue, the increasing demand for foreign exchange – of course, with the current account deficit and pressure to pay foreign debts- It fails to rein in the TL,” he said, adding:

“The decisions and statements that will come out of today’s MPC meeting will be of a quality to be looked at again. The wonderful bond did not come out of the hat this week, but it does not mean that it will not come out. The The fact that the citizens staying in the KKM will be crushed by the inflation that will quickly reach 90%, will also create a magnificent bond for the Treasury. Despite the unbearable load, it requires it to be activated by mid-July at the latest. “

While TL has lost approximately 9 percent of its value against the dollar since the beginning of the month, the loss has approached 20 percent since the beginning of the year. TL ended 2021 with a loss of more than 40 percent. Dollar/TL traded at 16.41/16.46 at 09:00 this morning.


According to the calculations made by the bankers from the leading information, the foreign exchange supply made by the CBRT to the market from its reserves in May has a marked increase trend compared to the first 4 months of the year. Therefore, the CBRT’s own foreign exchange reserves, which are already negative, are melting more and more every day in the current politics.

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, once again approaching minus 60 billion dollars, which brought about major political and economic changes before.

According to the calculations of the bankers, the net reserve, which will be announced in 1430 today, is expected to decrease from $ 11.5 billion to $ 10 billion or one measure below. In a similar form, it was expected that the total reserves would decrease to 100 billion dollars.


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. In fact, despite these foreign exchange revenues, net reserves have melted by 7.6 billion dollars in the last 4 weeks. The difference in the middle is that the currency is 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.


According to the calculations of economists, the cost of “stable” exchange rate policy accelerated in May after exceeding 30 billion dollars in the January-April period.

Similarly, many foreign exchange traders consulted by Reuters state that the CBRT has accelerated its foreign exchange sales since the beginning of May, and that foreign exchange sales that will cause a daily net reserve loss of more than 0.5 billion dollars, mean that sales have increased compared to previous months.

Apart from the Treasury’s inflation-indexed bonds, it is also monitored whether new foreign exchange resources can be provided to the public from abroad.



CDSs, which show the cost of protecting Turkey’s five-year debt against bankruptcy, reached a record level since the global financial crisis in 2008 with 730 points this week, according to Refinitiv data. Bankers point out that the rise in CDS has brought the Treasury’s dollar borrowing costs closer to double digits.

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