Dollar/TL started the day at a new peak, rising to 33.6950 in the rise that started with the global selling pressure last week. The two-week depreciation of TL against the dollar was approximately 1.3 percent.
TL liquidity developments in the markets are being monitored through the market participant survey to be announced today, ahead of next week's Central Bank (CBRT) interest rate decision.
Today, the July housing price index, whose calculation method has been revised, will also be announced with updated series.
After last week's volatility, U.S. economic data eased concerns about a recession in the world's largest economy. Global markets have been quieter this week as the data also dampened expectations that aggressive interest rate cuts would be needed in September.
Markets now give just a 25% chance the Fed will cut rates by 50 basis points next month, according to the CME FedWatch tool. That probability was priced in at 55% last week.
The dollar held firmer, particularly against the yen, thanks to a rise in bond yields after traders scaled back expectations that the Federal Reserve would have to ease monetary policy aggressively next month.
The strong course of the dollar keeps emerging market currencies under pressure despite the recovery in risk appetite.
The USD/TL rose to a new peak of 33.67 last week due to global selling pressure, but followed a more horizontal course this week. The new peak in the exchange rate was 33.6950 seen tonight, while the TL lost 1.1 percent against the dollar last week and then lost around 0.2 percent this week.
NEXT WEEK, CBRT INTEREST RATE DECISION WILL COME TO THE FORE
A Reuters poll shows that the CBRT is expected to keep the policy rate unchanged at 50% in August, following the last tightening it made in March to control inflation. The decision will be announced on Tuesday, August 20.
The median of participants’ estimates of the year-end policy rate in the survey is at 45 percent.
Four of the economists expect the first rate cut to occur in October, another four in November and two in December. Five institutions said they expect the CBRT to make the first rate cut in the first quarter of 2025.
A previous Reuters poll in July showed that the majority of rate cuts would be made next year. The survey expected the CBRT to cut interest rates by 2,250 basis points by the end of 2025.
Economists do not expect the CBRT to change interest rates next week, but possible changes in the MPC text are being closely monitored. Bankers will be watching whether this guidance will be removed from the text due to the decrease in liquidity, domestic demand and the possibility of an interest rate hike in the MPC.
OVERNIGHT INTEREST RATE RISE ABOVE POLICY RATE YESTERDAY
The CBRT, which can draw unlimited liquidity from the lower band of the interest rate corridor in the overnight market, also transferred the transactions to the Takasbank money market this week.
According to the information provided by the traders, the TCMB started to enter a purchase order that can draw TL liquidity with the 47 percent quotation, which is the lower band of the interest rate corridor in the Takasbank money market in the overnight term. According to the information provided by the bankers, the TCMB entered a quotation yesterday, but the transaction did not take place.
Data showed that the liquidity surplus was approximately 140 billion TL as of yesterday. The overnight interest rate rose above the policy rate for the first time since the beginning of the week at 50.36 percent yesterday.