The Dollar-TL exchange rate continue to rise as the Central Bank holds the policy rate steady at 50%, while global markets await the Fed’s next move.
The dollar-Turkish Lira (TL) exchange rate continued its gradual ascent today, trading around ₺33.90. Simultaneously, the Euro-TL exchange rate hovered at ₺37.47, reflecting ongoing upward pressure in foreign exchange markets.
Central Bank’s Steady Policy and Effects
Yesterday, the Central Bank of the Republic of Turkiye (CBRT) decided to keep its policy rate at 50%, aligning with market expectations. The CBRT emphasized its cautious stance against rising inflation risks, particularly noting the persistent pressure in service sector inflation. The bank also reiterated its commitment to tightening its policy if a significant deterioration in inflationary trends occurs.
This cautious approach underscores the challenges facing the Turkish economy, where the lira has depreciated by 0.6% against the dollar since the start of the week and by 2.2% since the beginning of the month.
Investment Global Market Focus
Investors are now turning their attention to the U.S. Federal Reserve, which is set to release the minutes from its July monetary policy meeting today. These minutes are expected to provide critical insights into the Fed’s future interest rate strategy.
Adding to the anticipation, Fed Chair Jerome Powell is scheduled to speak at the Jackson Hole Economic Symposium on Friday. His remarks will be closely watched for signals on whether the Fed is likely to implement a 25 basis points rate cut next month, a move that futures markets have partially priced in. There’s also a one-in-three chance that the Fed might opt for a more aggressive 50 basis points cut, depending on evolving economic data.
Outlook for the Turkish Lira
As the week progresses, the Turkish Lira’s performance against the dollar and euro will likely hinge on the outcomes of these global developments. Any dovish signals from the Fed could provide temporary relief to the lira, although domestic economic challenges remain a significant factor.
Key Points to Watch:
- Fed’s Policy Signals: The release of the Fed’s meeting minutes and Powell’s upcoming speech could shape global currency trends.
- TCMB’s Stance: Continued vigilance from the TCMB against inflationary pressures will be crucial in maintaining market confidence.
- Lira’s Trajectory: The lira’s depreciation trend may persist unless supported by positive economic data or a shift in global market sentiment.
Investors and market participants should keep a close eye on these developments, as they will likely dictate the short-term trajectory of the dollar-TL exchange rate.
Source: NTV / Prepared by Irem Yildiz