As the dollar prices begin the day with a 0.23% increase to ₺34.08, inflation concerns and global recession fears influence currency movements.
The dollar exchange rate against the Turkish Lira has shown a slight increase as it started the day at ₺34.08, a 0.23% rise from the previous day’s close. Meanwhile, the Euro/TL exchange rate also edged up by 0.4%, reaching ₺37.72. This movement in the currency market is heavily influenced by both domestic economic factors and global market conditions.
Inflation Concerns About Turkiye Continue
Recent comments from Hatice Karahan, Vice Governor of the Central Bank of the Republic of Turkiye (CBRT), have highlighted the ongoing impact of inflation on the Turkish economy. Karahan noted that as inflation continues to decline, there are expectations for improvement in economic outlooks. However, she emphasized that the fiscal landscape will be crucial in determining inflation trends moving forward.
- August Inflation Data:
The inflation rate for August was recently released, showing a 2.47% increase on a monthly basis. This uptick was largely driven by a hike in natural gas prices for households. However, on a yearly basis, inflation fell from 61.78% to 51.97%, signaling some relief for the Turkish economy.
Global Market Impact
The global markets have also played a significant role in shaping the current currency exchange rates. The release of macroeconomic data in the United States has reignited recession fears, which in turn have deepened the selling pressure in global markets.
- US Economic Data:
The Institute for Supply Management’s (ISM) manufacturing Purchasing Managers’ Index (PMI) rose slightly to 47.2 in August but remained below market expectations. Similarly, S&P Global’s manufacturing PMI came in at 47.9, also missing forecasts. These figures suggest that the contraction in the US manufacturing sector is persisting, which has led to a decrease in the yield on 10-year US Treasury bonds by approximately 9 basis points to below 4.83%.
Reactions from International Banks
The recent economic data has prompted several international banks to reassess their outlook on the Turkish economy.
- Citi’s Outlook:
Citi has highlighted the ongoing slowdown in Turkiye’s economy, warning of the risks associated with early monetary easing. - Morgan Stanley’s Prediction:
On the other hand, Morgan Stanley does not expect any changes in interest rates for the remainder of the year, suggesting a steady approach from Turkish policymakers.
Impact on Technology Stocks
The growing concerns about a potential global recession have had a pronounced effect on technology stocks, with significant losses reported in the sector.
- Tech Stock Performance:
Investors have begun reevaluating their positions in tech companies, particularly in the realm of artificial intelligence. Notably, Nvidia’s shares plummeted by 9.5%, while Broadcom, Qualcomm, and Micron saw their stocks decline by 6.2%, 6.9%, and 8%, respectively.
As the Turkish economy continues to grapple with inflation and fluctuating currency values, the impact of global market trends will remain a key factor to watch. The ongoing recession fears in the US and their ripple effects on global markets suggest that further volatility could be ahead for the Turkish Lira.
Turkiye Financial Markets Key Takeaways
- The dollar/TL exchange rate started the day at 34.08 TL, reflecting a 0.23% increase.
- Euro/TL exchange rate increased by 0.4% to 37.72 TL.
- August’s inflation rate in Turkiye showed a monthly increase of 2.47%, with a yearly decline to 51.97%.
- Global market trends, particularly in the US, continue to influence Turkish currency movements.
- International banks have differing outlooks on Turkiye’s economic future, with some warning of continued slowdown risks.
In conclusion, the Turkish Lira’s recent performance highlights the intricate balance between domestic economic policies and the broader global financial landscape. As inflation trends and international developments unfold, they will continue to shape the trajectory of Turkiye’s currency market.
Source: NTV / Prepared by Irem Yildiz