Why did the dollar rise? 10 separate items that made the dollar go up!

The dollar / TL, which fell from the 7.79 level, which fell after the Central Bank did not make the expected rise in interest rates on Thursday of last week, registered 8.0964 yesterday after that day and rose 4 percent in 5 days. Therefore, the dollar / TL gained 36 percent compared to the level of 5.9489 at the beginning of the year. There is a similar trend in the euro against the Turkish lira. In the month that Turkey’s two-year treasury bonds rose to 14:18 percent from 13.91 percent compounded, the five-year credit default swap (CDS) also recalled premium results. of 535 points. So what is going on with the currency these days?

THERE IS THE FEAR OF PENALTY FOR THE FIRST TIME

Of course, everyone is trying to find a reason for such a big rise, but it seems that he is not the only one. We can say that exactly 10 reasons, which market experts agree on, make the currency fever rise. Of course, some of these take precedence. Aside from technical reasons, the most important factor in currency fluctuation is mounting foreign policy tension. Political conflicts with the United States and European countries appear to be the most important factors in exchange rate mobility. In particular, the rhetoric of “sanction” from Western countries disturbs investors in the markets. Finally, President Recep Tayyip Erdogan’s speech to the United States and saying “Don’t be late whatever your sanctions” was one of the factors that increased investors’ anxiety about possible sanctions. S-400 missile defense systems that will escalate into the tension between Turkey and the United States has also increased this concern. On the other hand, when he is considered against Turkey in the US elections, Joe Biden is expected to raise concerns that he could also exacerbate sanctions against Turkey. Some experts believe that Biden will bring stability to the markets as there will be no surprise decisions unlike Donald Trump.

As history repeats itself

The second is that the Central Bank did not make the rate cut expected last week. Similarly, in August 2018, while the market waited, the Center did not raise interest rates. Also, there was a crisis with the United States, Father Brunson. Now again with the Central Bank of the United States while the same motion disputes and S-400 for the full support of Azerbaijan to its operations in Turkey increased the sanctions of risk markets to regain its territorial extension. It was revealed the need of the President of Azerbaijan, Ilham Aliyev, that Azerbaijan could be seen in the skies of Turkey F16, the explanation that it had reached the end point of the Karabakh conflict in the West and Turkey. It’s like a bad replay of August 2018. On the other hand, there is concern that the tension with France, whose starting point is the support given to Azerbaijan to liberate its occupied territories, could be negatively reflected on exports to Europe. An example of the influence of foreign exchange policy is the Gulf countries boycott of Turkish products. It is believed that this situation will negatively affect exports.

10.6 BILLION DOLLAR PAYMENTS IN 2 MONTHS

Now let’s go to the economic effects. The fact that the Central Bank’s gross foreign exchange reserve decreased by 42 percent in the last year from $ 81.2 billion to $ 42.8 billion is considered a risk factor. Furthermore, the current account deficit, which continues and is expected to continue due to structural problems, stands out as factors that support the dollar in the background. Given that the private sector has to pay off $ 42 billion in foreign currency debt in the next 2 months and $ 42 billion in 1 year, currency purchases have an important place.

THE PANDEMIC REACHES THE ECONOMIES

Another very interesting reason is shown as the reason for the increase in currencies. It is claimed that articles written last week by some columnists who are not related to the economy and that the weak Turkish lira will reduce imports and support exports, created the impression that the government will not protect the Turkish lira from now on. and therefore caused some companies and citizens to buy foreign currency. The increase of the so-called second wave of the pandemic in all countries gradually to the entire economy and, of course, will also negatively affect Turkey.

HERE ARE THE 10 REASONS THAT STARTED THE EXCHANGE

1-The failure of the Central Bank to raise interest rates as expected by investors.

2- The discourse of the “competitive exchange rate” model that has recently increased in some media.

3-Increase in foreign policy tension. Political conflicts with the United States and European countries and declarations of sanctions.

4-severe sanctions to Turkey in favor of the US elections of Joe Biden and greater probability of winning.

5- Declaration of the President of Azerbaijan, Ilham Aliyev, that the Turkish F16s will be seen in the Azerbaijani skies if necessary

6-After the call for a boycott of France, there may be a problem in exports to Europe.

7- Expectations of a decrease in exports to these countries due to the boycott of Turkish products by the Gulf countries

8-The rise of the pandemic, which is gradually called the second wave in all countries

9-The gross foreign exchange reserves of the Central Bank decreased by 47 percent in the last year to 42 billion dollars. The expectation that the collapse of reserves will continue due to the continuation of the structural deficit.

10-The amount of debt owed in foreign currency received by the private sector abroad will be 10.6 billion dollars in the next 2 months and 42 billion dollars in 1 year.

THE PRIVATE SECTOR WILL PAY DEBT OF 10 BILLION DOLLARS IN OCTOBER