The dollar continues to rise

Ahead of the Central Bank's interest rate decision to be announced on Thursday, the dollar/TL exchange rate has risen to the 40.43 level. According to a Reuters survey, the interest rate cut cycle may begin this week and continue until the end of 2026.

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The exchange rate is seeing limited gains ahead of this week's decision by the Central Bank (TCMB), which is expected to restart an interest rate cut cycle that is projected to last at least until the third quarter of 2026.

The dollar/TL, under pressure from both global and domestic political developments, started the day this morning at the 40.43 level. The lira's loss since the beginning of the year is approximately 12.5 percent.

There is no data to follow on the domestic agenda today. The Treasury will complete its July domestic borrowing program today with a direct sale of one-year dollar-denominated bonds and sukuk.

INTEREST RATE DECISION ON THURSDAY

This week, the market will closely watch the Central Bank's (TCMB) interest rate decision to be announced on Thursday, as well as potential credit rating reviews by Moody's and Fitch after the markets close on Friday.

According to a Reuters survey, the TCMB is expected to begin its cut cycle on Thursday with a 250 basis point reduction. The TCMB, which implemented 700 basis points of tightening following the arrest of Ekrem İmamoğlu in March, currently maintains 350 points of that tightening in its policy rate.

According to another Reuters survey, the general expectation is that interest rate cuts will begin this month and continue at least until the end of the third quarter of 2026. The market will also attempt to glean messages from the TCMB's decision text regarding the pace at which interest rate cuts will continue.

TARIFFS AND BALANCE SHEETS IN FOCUS

In global markets, investors are monitoring the customs duty negotiations the US is conducting with other countries, while also watching the balance sheets to be released this week.

Asian stock markets hovered near a four-year high, supported by Wall Street closing at a historic peak.

Rumors regarding the independence of the US Federal Reserve (Fed) and whether US President Donald Trump will dismiss Fed Chair Jerome Powell have kept investors on edge in recent weeks.

US Treasury Secretary Scott Bessent further fueled concerns about the central bank's independence yesterday by stating that the Fed as an institution should be fully examined.

Markets will watch Powell's speech today for clues as to when the Fed might ease monetary policy.

News Source: 12punto