It was stated that the Central Bank intervened directly in the market by selling foreign currency once again. While the lira reversed its losses against the dollar after the intervention, it reached a new record worthless level before the intervention, approaching 14. With what was done today, the Central Bank intervened in the market for the third time in December.
The Central Bank, as in its previous interventions, acts against unhealthy price formations. At this point, we observe that there are constant interventions from the same levels in order to prevent volatility in the rises, which are considered as voluminous. At this point, it can be thought that the 14 level in the exchange rate is maintained in order that the Central Bank does not devalue the lira further above this exchange rate. Of course, this is not a stand-alone criterion. The rapid and unpredictable rise of the exchange rate makes theoretical price determination impossible. In terms of export criteria, it may be supportive in the short term, and it may be temporary for companies. However, it is certain that it will cause a serious problem in terms of cost and budget determination. On the other hand, the continuous deterioration of inflation expectations indicates that the burden on the economy may increase further through the inflation channel.
On the adequacy of reserves; Gross reserves were increased from 90 billion USD to over 120 billion USD by supporting swap agreements, temporary foreign reserve resources and required reserves. In terms of the adequacy of reserves for short-term debt financing, we think that the movements towards more reserves will continue. However, the fact that the net reserves are still limited weakens the Central Bank's hand in its interventions.
At this point, it is important what decision will be made at the CBRT meeting on 16 December. We still see a significant range of uncertainty. With the Central Bank's foreign exchange interventions, it does not happen that the exchange rate drops continuously, the exchange rate returns to its previous levels afterwards. The extent to which the CBRT's decisions will be supportive will be critical for sustained relief. Dollarization continues to rise, with weekly data revealing that FX deposits have reached almost 63% of total deposits. In order for the dollarization trend in the economy to reverse, the lira must regain its store of value function. This can happen with conventional policies that will break the expectation that the lira will depreciate continuously. We think that the Central Bank should also take decisions in this direction. At this stage, we expect the bar to be kept high in terms of policy transformation and the loosening policy will be maintained with the motivation of the new economy perspective.
Kaynak: Tera Yatırım
Hibya Haber Ajansı