Reuters: A new currency crisis could occur in Turkey, investment banks are worried

Reuters: Türkiye'de tekrar bir kur krizi yaşanabilir, yatırım bankaları tedirgin

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Reuters news agency assessed the latest developments in Turkey’s economy in its analysis. In the analysis, it was warned that Turkey could again be dragged into a currency crisis. In the analysis, it is stated that Turkey’s relations with the West are on the agenda, and investment banks are worried about dwindling reserves.

Reuters: A new currency crisis could occur in Turkey, investment banks are worried
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In the analysis published by Reuters today, it was said that a new currency crisis could arise in Turkey.

According to Reuters, the possibility of a rapid depreciation of the Turkish lira after last year’s currency crisis will determine whether President Recep Tayyip Erdoğan is re-elected or not.

The Turkish lira has lost 20% of its value against the dollar this year.

Rising energy and food prices around the world have put the Turkish economy, which already suffers from an inflation problem, even more difficult.

Annual inflation reached 70% in April.

According to Reuters, Turkish authorities prevented the economy from booming by selling off reserves and introducing currency-protected deposit accounts in December.

Despite this, the agency’s analysis warns that the economy may not be ready for the next exchange rate shock, as the reserves of the Central Bank of the Republic of Turkey (CBRT) have fallen to minus 55 billion. of dollars.

Although it is pointed out that credit growth in Turkey has reached 50%, it is stated that inflation could reach triple digits because of this.

However, the CBRT continues to maintain the key rate at 14% despite the rise in the inflation rate.

“INVESTMENT BANKS ARE CONCERNED”

Turkey’s relations with the West are on the agenda due to President Erdogan’s opposition to Finland and Sweden joining NATO.

US-based Citi Bank said energy and food imports could increase the current account deficit to 5% of national income.

On the other hand, investors believe it is important that individuals and institutions continue to take interest in currency-protected TL term deposit accounts.

According to the four economists who did the math for Reuters, there are estimates of deposits worth $10 billion due in July and $20 billion due in August.

‘INSTABILITY CAN DEFINE ELECTION RESULTS’

Speaking to Reuters, JPMorgan analyst Zafar Nazim said it’s important to maintain retail interest in these accounts because of the negative real interest rate.

According to Daniel Moreno, director of emerging markets at the Swiss-based investment bank Mirabaud, this system cannot be sustained.

Mirabaud sold its remaining Turkish bonds during the currency crisis last year.

“It seems like things are getting worse day by day. However, I don’t think Turkey will go down without a fight,” Moreno says.

Foreign investors, mentioned in Reuters news, say markets could rise due to the increased possibility of reverting to orthodox economic policies if Erdoğan loses the election.

Petar Atanasov, of emerging markets fund Gramercy, comments that “instability in Turkey may determine election results”.

Atanasov, meanwhile, says: “The markets will remain wary until the last moment. It will be an election with uncertain results, anything can happen.

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