The dollar/TL rate, which has accelerated in recent weeks with the effect of the FED’s and the Central Bank of the Republic of Turkey’s interest rate decisions, continues to break records one after the other. The dollar renewed its historical record by exceeding the level of 18.62 in the morning.
The rise of the currency against the Turkish Lira continues.
On the morning of October 5, 2022, the parity, which saw 18.62 for a short time, decreased to 18.57 after the rise. The euro is around 18.51. In the spot market, the dollar/TL buying price is 18.5664 lira, and the selling price is 18.5769 lira.
While consumer prices reached the highest level since 1998 with 83.45 percent in September, the general expectation in the market is that the CPI will peak at 90 percent or slightly below this level in November, unless there is a new exchange rate shock. Year-end expectations, in which drastic upward revisions slowed down, now flattened in the 70-75% band.
With the difference between Istanbul inflation and the historical peak of 24 points, question marks regarding the measurement quality continue on the grounds that it does not reflect the realizations on the street in the CPI.
GOLDMAN SACHS’ INTEREST EXPECTATION
Goldman Sachs also expects that the CBRT will continue to cut interest rates and envisages a 100 basis point rate cut every month until the end of the year.
The government aims to fight inflation by turning the chronic current account deficit into a surplus by implementing an economy program that supports export-oriented production and investment with low interest.
The decline in inflation, which will be experienced mostly with the contribution of the base effect, will continue in the first months of the next year. However, according to economists, how permanent the decline will be depends on the absence of a new depreciation in TL.
While the CBRT lowered the policy rate by 200 basis points in the last two months, the TL has depreciated by 3.2% against the dollar since the first cut.