Turkish Lira strengthens against Dollar as CBRT measures take effect

Turkish Lira strengthens against the dollar, trading at 32.1725 TL in the free market on March 26, while the Euro starts the day at around 34.92 TL

Last week, the dollar, which had reached 33.40 TL in exchange offices, fell to 32.60 TL following measures taken by the Central Bank of the Republic of Türkiye (CBRT).

However, the dollar began the day at 32.1725 TL in the free market with a limited increase on March 25.

Economists are highlighting the losses incurred by those who purchased physical dollars in the past week, stating: “Currently, a valuable Turkish Lira (TL) policy is being implemented steadfastly. The TL gained 3.75% in the past month, while the dollar rose by 3.35%. Moreover, the return on TL deposits has increased to 4.50% monthly. Everyone should calculate accordingly.”

The volatility in exchange rates following the CBRT’s interest rate decision last week has taken on another dimension.

Despite the dollar dropping to 31.75 TL on March 21 after a 500-basis-point interest rate hike and rebounding, the measures’ initial effects began manifesting in exchange rates. 

The margin between the free market and the Grand Bazaar, which reached 1 TL last week, fell below 50 kurush at the beginning of this week.

March 26 Dollar exchange rate

With four business days left until the elections, the dollar’s price in the free market is hovering slightly above yesterday’s closing at 32.1725 TL.

Meanwhile, the dollar is priced at 32.6400 TL in the Grand Bazaar.

Last week, the selling prices in the Grand Bazaar had risen to 33.40 TL.

The initial effects of the CBRT’s decisions began to show in exchange offices, and the gap resulting from physical demand, which was 1 TL, began to narrow.

Meanwhile, the Euro price on March 26 starts the new day at around 34.92 TL.

TL Deposits or Dollars?

According to the latest figures, TL deposit yields have risen to around 55% annually, which indicates a monthly return of approximately 4.5%.

Consequently, the return for a saver who holds 100,000 TL in TL deposits for one month amounts to 4,500 TL.

This return was approximately 3,750 TL over the past month. Considering that the dollar has risen by 3.35% in the last month, it becomes evident that the TL has yielded more.

Expectations for the Dollar Post-Elections

Economists draw attention to the recent yield in the TL.

“There is panic-driven demand for foreign currency in the market, fueled by excessive manipulation on social media. People rush to exchange offices for a sense of protection, recalling the events following the last election. We now have a central bank determined not to let the TL lose value in real terms. All measures, including the pre-election interest rate hike, signify this,” they said.

Attention to Dollar Buyers!

Economists emphasize the significant message conveyed by the CBRT, especially with the 500 basis point interest rate hike before the elections.

“The value of the national currency is crucial psychologically in Türkiye. At this point, the forward yield of the TL has increased to around 55-60% annually. There is no expectation of such an increase for the dollar under current conditions for a year ahead. Moreover, it will not be allowed to reduce inflation. Therefore, those opting for the dollar should make their calculations accordingly,” they said.

Source: Newsroom

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