Goldman Sachs weighs in: Why are the Dollar and Euro rising?

Goldman Sachs economists Clemens Grafe and Başak Edizgil stated that the start of dollarization is an “indicator of deteriorating expectations.” 

According to a report by Bloomberg, Goldman Sachs, which expects the first interest rate cut to take place in September, said that the acceleration in the shift toward the dollar and the increase in inflationary pressures could lead to a delay in the interest rate cut cycle.

According to data from the Central Bank of the Republic of Türkiye (CBRT), an upward trend in foreign currency deposits has been notable in recent weeks.

INTEREST RATE DILEMMA

Barclays Economist Ercan Ergüzel said this could be a “significant trend change.” Since March, foreign currency deposits had fallen by approximately 24 billion dollars as confidence in local currency assets and the authorities' ability to keep the Turkish lira relatively stable increased. The Turkish lira has lost approximately 13 percent of its value against the dollar this year, and since monthly losses have remained below the inflation rate, the currency has gained value in real terms.

Morgan Stanley Economist Hande Küçük assessed that the statement released by the CBRT with its latest interest rate decision supports the forecast that the policy rate will remain unchanged for the remainder of the year.

News Source: 12punto