Yesterday the US Federal Reserve (Fed) made the largest rate hike since 1994. The Fed, which cut interest rates to 1.5% and 1.75% with a 75-point increase base, raised the year-end interest rate forecast to 3.4%.
Fed officials, who have predicted economic growth in the United States will drop to 1.7% this year, have predicted that they will cut the interest rate in 2024.
Relief that the Fed did not raise interest rates by more than 75 basis points has given way to questions about how aggressive rate hikes will take place, which should continue for a while.
The dollar index, which changed direction with the Fed’s decision after hitting a 20-year high of 105.79 yesterday, was trading at 104.96 up 0.2 percent today.
The currency exchange processor of a bank, “We expect the dollar index to gradually rise from its current level of 105 to 110 following yesterday’s Fed decision and forward-looking rate hike messages. This means a global scenario where depreciation pressures will continue for the TL.” She said.
Today, the CBRT’s weekly money bank and foreign exchange reserve statistics will be followed in the domestic market. According to bankers’ calculations, CBRT’s net reserves are expected to drop from $ 10.52 billion to $ 8.5 billion.
GLOBAL BOND YIELDS ARE INCREASING, DECREASING IN TURKEY
With CBRT’s obligation to hold bonds against foreign currency deposits, which will be implemented later this month, the 10-year benchmark bond yield decreased by 700 basis points, while the effect of the process on the banking sector is observed. .
Analysts fear that decisions that lead the public to a “pivotal” role in the post-FX bond market could increase inflation and interest rate risks in the banking sector.
The yield on the benchmark 10-year Treasury bond remains below 20% despite inflation exceeding 70%.
The CBRT is also expected to announce the coefficient for this application by the end of the month.
THE NEED TO EXCHANGE THE ECONOMY CONTINUES
Bankers are following the government’s steps announced since Thursday last week, excluding the swap facility dedicated to non-residents, who risk creating foreign exchange assets. The remaining applications do not provide for the possibility of creating new currency resources.
The practice of expanding non-resident access to TL-denominated assets for use in designated areas is being pursued in terms of the possibility of creating new foreign exchange assets.
After these steps, Dollar / TRY swung in both directions around 17 but failed to stay below the 17 level. The currency was trading at 17.2500 / 17.2990 at 08:37 this morning.
“POSSIBILITY OF BANKRUPTCY”
Turkey’s five-year CDS closed yesterday at 805/825 after approaching 844 basis points this week. Bankers value current CDS rates at one-third of the Treasury’s foreign-denominated debt. “probability of failure” They point out that the cost of the 5-year loan is 10.5% higher. Whether the Treasury would prefer to borrow at this cost or not is a popular topic in the markets.