Showing posts with label Turkish Lira. Show all posts
Showing posts with label Turkish Lira. Show all posts

Friday, 9 December 2016

Turkish exchange rate policy in these days: Take it easy!

I will talk a bit on Turkish economic policy which is driven by the President in 5-minute speech.
USD/TRY exchange rate has reached to 3,58 on December, 2. Four days later, Mr President decided to take control of USD/TRY through some suggestions, saying that higher USD/TRY exchange rate is a complot against Turkey.
 
Apart from the dependency of Central Bank and this speech, I am wondering if it is thought as our economy as closed economy and not affected by US monetary policy, or other countries' currencies which we are in relations with? 
The second thing Mr President says that banks should lower the interest rates. If interest rate is lowered, why people would keep their assets in TRY.

His speech was only on USD/TRY. What about EUR/TRY? Should people exchange their EUR assets in TRY or gold then? What about ECB monetary policy then?
Same for FED policies. How does he aim to control their monetary policies?

I think he assumed no other central banks, no trade, no other currency than USD and TRY...
 


Thursday, 30 January 2014

money policy decisions at midnight

The situation in Turkey from December, 17 was continuing, with especially EUR/TRY and USD/TRY rates, (recorded highest rates as... 3.203 and 2.3335)
Then, Central Bank of Turkey decided to intervene as for controlling this high leakage of Turkish Lira.
Today I mean at midnight, they have announced that the interest rates and one week repo rate  in the interbank market and BIST Repo Repurchase-Reverse Repurchase Agreement markets, have been increased as: 

  • Overnight Interest Rates: Marginal Funding Rate from 7.75% to 12%, borrowing rate from 3.5% to 8%, and the interest rate on borrowing facilities provided for primary dealers via repo transactions from 6.75% to 11.5%.
  • One-week repo rate, from 4.5% to 10%.
  • Late Liquidity Window Interest Rates (between 4:00 p.m. – 5:00 p.m.): Borrowing rate is kept at 0%, lending rate, from 10.25% to 15%.

With these these announcements, EUR/TRY and USD/TRY rates followed a downtrend during the day. But, in the medium run, surely, a high inflation rate problem can be arisen.
On the other hand, tonight The US Federal Reserve reduced its monthly asset purchases by $10bn - as expected. But this reduction in the monetary expansion of USA, even it has been expected, in Turkey, can cause the expectations about increasing of USD/TRY rate. In the medium run, I think that Central Bank's interest rates decisions will be less effective on USD/TRY rate than EUR/TRY rate.