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The rise in the dollar continues: how much is the dollar on the first day of the week? (June 6, 2022)

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Dollar/TL continues to rise after seeing 16.55 level for the first time after 20 December. The exchange rate is currently trading at 16.5655 levels.

Domestically, the monthly price developments report to be published by the CBRT and the real effective exchange rate index data for May will be followed.

Following the data agenda, a cabinet meeting will be followed, which will include 3600 additional indicators, which concern 5 million civil servants and retirees.

Collateral, liquidity and macroprudential measures, which the CBRT also announced in the MPC summaries published last week, are another agenda item followed in the markets.

In this context, possible changes in the GDDS basket or rate of the collateral blockage applied for three-month repo and swap processes are monitored for liquidity collateral. For additional macro measures, possible changes to be made in the required reserve application for newly initiated loans, other than selective loans, are followed.

THE PROBLEM OF INFLATION IS GROWING, THE QUALITY OF MEASUREMENT IS QUESTED

While annual inflation, announced by TURKSTAT, reached the peak of 24 years with 73.5 percent in May, the rise in inflation is expected to continue until the last months of the year.

With the changes made by TUIK in the explanation technique this month and the information that is below the expectations, the measurement quality of TUIK is also being questioned more.

While TURKSTAT stopped publishing the Turkey-wide item basket and average price table that it routinely publishes, the changes in more than 100 items started to be displayed instead. Frequent leadership and management changes in the institution are also.

Economists expect annual CPI to peak in the range of 80-95% in the last quarter. In the Reuters polls, revisions continue, suggesting that inflation will remain at higher levels for a longer period of time.

On the other hand, developments within the scope of NATO, Turkey’s relations with the West, developments in the Russia-Ukraine war, and the visit of the Saudi Arabian administrators to Turkey are in the middle of the agenda.

RESERVE CHANGES ARE WATCHED CLOSELY

The CBRT obviously increased its foreign exchange sales measure in May, when the TL lost nearly 10 percent against the dollar. However, bankers pointed out that the CBRT reserve losses, which continued from mid-April to the third week of May, stopped in the last two weeks.

Markets describe the current exchange rate policy in Turkey as a “publicly controlled” regime. In this context, the Currency Protected Deposit (KKM), which has been in operation since the beginning of the year, monitors the changes in reserves together with the foreign exchange obtained through applications for the purchase of export returns. The difference in the middle is used for “stability” in the currency, in the form the government qualifies.

The CBRT’s international net reserves decreased by $9.6 billion in five weeks from mid-April to May 20. Net reserves, on the other hand, increased by $2.6 billion last week.

According to the calculations made by the bankers from the pioneering data, it seems that the CBRT can “complete the week without losing reserves” last week. Markets will watch how long it will take before reserve losses stop or return to a finite increase.

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