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USD / TRY, coronavirus outbreak of the world market experienced selling pressure, in addition to the 7 appeared in the market not to be closed due to the mass-market in Turkey.
In recent weeks, the exchange rate was quoted near the 7 limit; Today’s volume remains low due to the market holidays in Turkey causing the exchange rate to rise.
The economic concerns caused by the coronavirus epidemic, the low earnings of the companies that recently announced their balance sheets, and the low economic indicators of most countries, increased interest in reserve money and a safe dollar.
Therefore, the dollar strengthened against the currencies of developed and developing countries.
The Bloomberg Dollar Spot Index, which shows the course of the dollar against the currencies of the G-10 countries, rose 0.4 percent today.
According to the Bloomberg HT report, US Treasury bonds. USA They also gained slight value due to demands for safe harbor quality in Asia, where transaction volume was low due to holidays.
The dollar / TL rate, which started the day at levels of 6.99, began to rise after fluctuating at these levels for a time.
At noon, Kur rose above 7 levels.
The rate peaked at 7.04 today, while it balanced at 7.02 at night.
Therefore, the daily loss of TL was greater than 0.5 percent.
Speaking to Bloomberg, Sean Callow, senior currency strategist at Westpac Banking in Sydney, commented: “The US dollar remains a safe-haven currency in the coronavirus era; it outperforms traditional safe havens like the yen and the Swiss franc. “
Are CBRT reserves negative?
Some experts and analysts think that concern caused by the collapse in CBRT reserves played a role in this rapid rise in the dollar / TL exchange rate.
In the market for a long time, the Central Bank of Turkey (TCC) has heard of dissolving its reserves to prevent the rate from rising above 7 levels.
TCMB President Murat Uysal said in a statement yesterday to reporters that he had no exchange rate targets and that there was nothing to worry about reserves.
Reuters news agency said CBRT stocks have dipped to alarming levels.
In mid-March in response to Turkey’s coronavirus outbreak from $ 5 billion, indicating that it purchased a record level of government bonds from Reuters, but also to rise above the Bank’s 7-tier rate. Central since mid-April, the method of exchange and foreign currency reserves through public banks suggested that it melt.
According to the accounts of the processors, Reuters said that public banks sold $ 32 billion in foreign currency this year, and this is equal to the total number of interventions carried out in the market last year, even after the first four months of 2020.
Calculations by some processors suggest that CBRT’s net reserves have decreased to less.
The processors interviewed by Reuters and did not want his name used, said the exchange rate has exceeded the level of 7 and has been provided by foreign bank foreign exchange sales to date. However, the processors stated that the unsustainability of these sales creates sales pressure on TL.
A processor said that according to its calculations, the CBRT’s net reserves fell to less than $ 2 billion, saying “no country can afford a reserve loss.”
In this case, the largest amount in Turkey will need to be negatively reflected in foreign currency debt to pay $ 170 billion this year.
Canada-based investment bank TD Securities stated in its report released this week that the CBRT could melt its reserves by July.
Gross reserves fell $ 1.3 billion last week
According to weekly money and bank statistics released by the CBRT on Thursday, the central bank’s gross foreign exchange reserves fell $ 1.3 billion to $ 52.7 billion last week.
Total reserves decreased by $ 464 million to $ 86 billion 447 million last week.
FT: They tried to keep it below 7 but it didn’t work
The Financial Times newspaper reported on its efforts to keep the rate below 7 also relevant Turkey on Friday said it could not implement.
Speaking at the journalistic company Merian Global Investors of emerging countries link country manager Delphine Arrighi, saying that the economic burden will be felt for years to outbreak of the Turkish economy of coronavirus said he is eager for Turkish lira.
In a news report that efforts to support the TL are becoming more difficult with the CBRT’s merger reserves, a London processor said, “State banks sold about $ 300 million in open markets on Friday morning. , but still failed to keep the TL below 7. “suggested.
The chief economist at Bloomberg HT television editor Gökhan Şen explains the relationship between reserves and exchange rates in the article he wrote in the Habertürk newspaper:
“Some see that the rate is melting due to different reasons in an uncertain environment. Our country is here, for example. The reserves are selling with uncertainty, and this time, because the reserves are low, the exchange rate is losing value. A kind of negative feeding cycle. “
In addition, he determines that the main thing is not the level of the reserve, but the form of management: “What type of financial architecture do we design in the long term? According to him, the level of the reserves may or may not matter.”
The Turkish lira has depreciated 14 percent against the dollar since the beginning of the year.
Submissive: no currency target, no worries about reserves
CBRT President Uysal said there is nothing to worry about reservations.
Uysal gave the following response when a journalist recalled comments that the Central Bank’s reserves were negative:
“We are going through an extraordinary period. Risk appetite has decreased. There has been an outflow of capital from developing countries. As with other central banks, there may be fluctuations and fluctuations in reserve levels. As we often say in our communication, it is necessary to evaluate the reserves on the total reserves. Our general reserve level is a short-term obligation. ” we don’t think it’s a problem. “
Uysal also said: “We can check that there is no exchange rate target by looking at developments in the past two months. We do not have a defense mechanism related to the level of the exchange rate.”
“I have stated that our exchange negotiations with central banks continue. We continue to strengthen this period. The process for establishing an exchange line with more central banks continues. I can say that the fluctuations in reserves are temporary. The pressure on the exchange rates will gradually decrease. “
Uysal also stated the words “We have no recourse or exchange initiatives with the IMF.”
The institution’s year-end inflation forecast was announced at 7.4 percent.
