Dollar reaches historic high against the Turkish Lira

While the dollar continues its rise against all world currencies, it had been following a stable course against the Turkish Lira. However, today it broke through, reaching a historic peak of 44.0780 lira. This development has created anxiety in the markets due to the tension in the Middle East and the impact of oil prices.

THE RISE IN OIL PRICES AFFECTS MARKETS

The escalation of conflicts in the Middle East and the rise in oil prices continue to impact global markets. With the increase in demand for safe-haven assets, the dollar has gained more than 1 percent in value this week. The dollar index stabilized around 99 today.

IRAN'S NEW ATTACKS IMPACT THE DOLLAR

As the US-Israel attack on Iran enters its seventh day, Tehran has launched a new missile and drone attack in the Gulf. US President Donald Trump stated that he wants to play a role in choosing Iran's next leader. He did not see the late religious leader's son, Khamenei, as a possible candidate.

OIL PRICES AND INFLATION FEARS

High oil prices have increased concerns about a resurgence of global inflation. This situation has strengthened expectations that the Federal Reserve will delay interest rate cuts. Pressure has formed, particularly on the currencies of economies that are major oil importers.

FED INTEREST RATE CUT EXPECTATIONS DELAYED

Markets have pushed back expectations for the next Fed interest rate cut from July to September or October. The dollar became the currency that gained the most value against the euro this week. This situation once again highlighted Europe's heavy dependence on Middle Eastern oil.

DOLLAR HITS RECORD AGAINST TL

The dollar, which had been stable against the TL due to the Iran war, reached a historic level of 44.0780 lira after a 4-day resistance. This is the highest value the dollar has reached against the Turkish Lira.

CENTRAL BANK MEASURES

The Central Bank announced two important measures on Sunday against the Iran war, which emerged in the final phase of the disinflation process. One of these measures was the suspension of 1-week repo auctions, and the other was the initiation of Turkish lira-settled forward foreign exchange sales. Additionally, the Central Bank began funding banks at 40 percent, which led to an increase in interest rates and a rise in deposit interest rates.

FOREIGN EXCHANGE SALES TRANSFERRED TO THE CENTRAL BANK

Another measure by the Central Bank, Turkish lira-settled forward foreign exchange sales, has been put into effect. In this way, companies in need of foreign currency began to obtain it from the Central Bank instead of the free market. This step was evaluated as a move aimed at balancing foreign currency demand.

News Source: 12punto