Will the dollar break new records and dethrone the Turkish Lira? 💸

22 Ağu 23:30

Now that the dollar/TRY is pushing past 39, are we officially calling this the “new normal,” buddy? In my opinion, the Central Bank needs to stop sugar‑coating things with words and actually use its tools—rates, reserves, interventions—seriously. Their latest moves were to cap foreign‑exchange‑linked swaps and raise required reserves, but we still haven’t tamed inflation or the currency. If the CDS spread on TL‑denominated assets has jumped above 800 basis points, it means we’ve lost investor confidence – and just saying “we’re watching” isn’t enough. On the other hand, if after yesterday’s 39.20 level the rate climbs to 39.50 today, as most analysts expect, that’ll be the official “psychological break to 40.” Honestly, the small uptick in banks’ overnight FX rates lately (the EUR/TRY overnight rate is sitting around 55%) is feeding that pressure. If corporate firms start panic‑selling to meet their FX obligations… that’s when the scramble for an emergency fix kicks in. For example, according to yesterday’s data, the CBRT’s net reserves fell to –$52 billion – we need a serious step to close that gap, otherwise the exchange rate will keep ruling the roost.

23 Ağu 00:12

Friends, we see the dollar’s 39‑cent pressure, but let’s not forget that the real issue is the real exchange rate. According to the latest data, the Turkish Lira’s real effective exchange rate (REER) has depreciated by about 40 % since mid‑2021. That basically shows the TL has already been “knocked off its throne”; now we’re just talking about the volatility in the official rates. Looking at the central bank’s recent moves, it’s clear they’re trying to curb the rate directly through intervention rather than raising interest rates. Last week they supported the market with almost $2 billion through foreign‑currency sell auctions, but that’s only a temporary relief. The core problem is the weakness of foreign‑exchange reserves: gross reserves are around $150 billion, yet net reserves are in the negative once swaps and forwards are taken into account. It’s obvious that monetary policy isn’t tight enough to fight inflation. Yesterday’s inflation figures were above 75 %, while the central bank’s policy rate is only 50 %. That gap erodes investors’ confidence. On top of that, geopolitical risks add to the mess—natural‑gas debts from Russia, the trade deficit, and the uncertainty surrounding upcoming elections. In short, the TL’s breaking point has already been reached; now we’re just waiting to see how quickly it will wear out completely. The central bank’s interventions may look like short‑term antidotes, but a radical shift in monetary policy is needed for a lasting solution. Otherwise we’ll end up not just with a cold, but with pneumonia. 😤

23 Ağu 00:54

The fact that the dollar’s 39‑level is putting pressure on us and the lira is hitting rock bottom really makes us think, bro, seriously. In my view, the real problem isn’t that the Central Bank’s last moves are insufficient; it’s that economic policy can’t keep up with the developments. Measuring everything only by the exchange rate is a mistake, because inflation and interest rates are climbing at the same pace. So it’s not just the dollar that will knock the lira off its throne, but the loss of confidence that’s been building for a long time. Are we going to see new records today? Looking at it, the markets are under pressure and the tools the Central Bank has are limited. Even the intervention they made yesterday was met with harsh criticism, which means the slowdown we’re hoping for is going to be harder to achieve. In the coming days, the reactions of both domestic and foreign players in the market will be critical. Instead of judging the lira’s crash in a single day, we need to act with a long‑term strategy. Otherwise, I think getting sick (i.e., a “flu”) is inevitable.