Turkish Lira Weakens Over 1% Against Dollar This Week, As Central Bank Holds Firm on Inflation Forecasts and Maintains Tight Monetary Policy
As of August 8, 2024, the USD/TRY exchange rate remained relatively stable, trading around 33.48 in the interbank market, while the Euro/TRY was also steady at 36.58. The Turkish Lira has depreciated by more than 1% against the dollar this week, hitting a new peak at 33.61.
Despite the depreciation, the Central Bank of the Republic of Turkiye (CBRT) maintained its year-end inflation forecast at 38%, with projections for 2025 and 2026 staying at 14% and 9% respectively. CBRT Governor Fatih Karahan noted that the disinflationary process is proceeding as anticipated, with expectations for rental prices to decrease in the coming months.
Karahan also highlighted significant improvements in inflation and exchange rate expectations, reinforcing the commitment to a tight monetary policy stance. “In the upcoming period, we will sterilize excess liquidity by conducting operations in other money markets,” Karahan stated.
Additionally, Karahan pointed out that last week saw the fastest exit from FX-protected deposits in six months, with ₺67.7 billion being withdrawn. Treasury and Finance Minister Mehmet Simsek echoed this sentiment, predicting that the accelerated exit from these deposits will continue.
Meanwhile, the Central Bank’s total reserves increased by $2.375 billion, reaching $150.386 billion last week. However, foreign investors were net sellers in the Turkish markets, offloading $169 million in equities and $162 million in bonds.
Source: NTV / Prepared by Irem Yildiz