The dollar's rise continues: All eyes are on today

The dollar exchange rate started the day at 28.79 TL. The Euro is finding buyers at 31.431 TL. While domestic markets are locked on the interest rate decision to be announced tomorrow, the effects of the Fed minutes are being followed externally.

Expectations that the lower-than-expected inflation data released last week could lead the Fed to loosen monetary policy and move toward interest rate cuts weakened as of yesterday. The Fed minutes released yesterday signaled that there might be a need for further tightening.

NO EVIDENCE OF 2 PERCENT

The data indicated that if efforts to reduce inflation prove insufficient, further interest rate hikes might be necessary. The Fed committee emphasized that high interest rates are beginning to constrain households and businesses. While noting that inflation is still running above the 2 percent target, Fed members stated that they are waiting to see more evidence that inflation is falling to 2 percent.

The Fed kept the policy rate steady in the 5.25 to 5.50 percent range at its last meeting. Following the minutes, the DXY index, which measures the dollar's strength against other currencies, recorded an increase. Locally, an important statement came from the Minister of Labor regarding the minimum wage, which could affect inflation indicators. Minister Işıkhan announced, "There will be a single increase in the minimum wage." Due to inflation exceeding expectations in 2023, a second raise was implemented in June 2023, and the minimum wage was increased to 11,402 liras.

With Turkey's credit risk premium falling below 350, the tendency of private companies and banks to borrow in foreign currency continues to increase. Most recently, İş Bankası secured a syndicated loan of 411 million euros and 465 million dollars with a 367-day maturity.

Expectations regarding the interest rate decision to be announced tomorrow are taking shape. According to surveys conducted by both Reuters and Anadolu Agency with economists, the Central Bank of the Republic of Turkey (TCMB) is expected to raise the policy rate by 250 basis points to 37.5 percent.

ALL EYES ON THE CONSUMER CONFIDENCE INDEX

The consumer confidence index will be announced today.

In its 3rd Quarter Financial Stability Report published last week, the Central Bank stated that tight monetary policy is showing its effects.

News Source: 12punto