Wolf red alert. Yeniçağ newspaper writer Evren Devrim Zelyut, who made a remarkable statement on the exchange, drew attention to June 2-3.

Wolf red alert.  Yeniçağ newspaper writer Evren Devrim Zelyut, who made a remarkable statement on the exchange, drew attention to June 2-3.


The article by Yeniçağ newspaper writer Evren Devrim Zelyut

Wolf red alert!

When we look at what happened to the reserves, as of May 26, the total foreign assets of the CBRT stood at 1 trillion TL 730 billion, the total foreign exchange liabilities stood at 1 trillion TL 664 billion TL, and the difference, i.e. when the debts are subtracted from the assets, remains 66 billion TL. This equates to $4 billion.

However, our net reserve is not that much… There are also swaps, that is to say the currencies borrowed by the Centre, and they must be deducted from this figure. As of May 20, the swap total was $64.6 billion. 64.6-4 = minus $60.6 billion…

A state like Turkey has 60 billion dollars in its coffers…

God forbid, if there was an earthquake, if a superpower attacked us like they did against Ukraine, when the stocks run out, the money to replace them, namely the reserves, is less.

How much is Turkey’s short-term debt? $181 billion. Normally, a State’s reserve should be sufficient to cover its short-term debt and import for 6 months. But Turkey is far from it…

Nothing new in what you’ve written so far, I hear you saying don’t repeat yourself. Hello, you are right. Next, let’s say two things that are not mentioned in public, so that our difference can be revealed:

1- The exchange rate situation is really bad, because in the United States opinions have started to emerge that the Fed should take a break from the rate hike cycle in September. Because the United States is very scared of the risk of recession, and the incoming data data, for example, indicates the dramatic decline in home sales.

Due to this situation, the DXY, i.e. the Dollar Index, fell from 105 to 101 and the yield on US 10-year bonds fell from 3.20 to 2.75, in other terms, the dollar lost blood. As a result, emerging market currencies appreciated, for example the South African rand rose from 16.20 to 15.50 against the dollar. And read it? It went from 3:80 p.m. to 4:30 p.m.

What does the rise of the lira mean when the dollar weakens around the world and the currencies of developing countries appreciate? This shows that things are very bad in Turkey.

Look, the current account deficit in Turkey is no longer financed by income, but by debt in a way. We had a $32 billion merchandise trade deficit in the first four months. In other words, we have a deficit of about $7 billion to $8 billion a month. Suppose tourism revenues are good. This season, $40-45 billion in tourism revenue means we’ve made up the 6-month shortfall. What about the remaining 6 months? When Turkey runs a deficit of at least $45 billion in 2022, what source of foreign exchange will it close with?

We say the dollar around the world is weakening because interest rate hikes may be paused, but there are two important pieces of data to look at if the FED pauses interest rate hikes: the first is inflation, and the second is the state of employment. I wonder how much they will say that we have disrupted employment, ie the economy, with interest rate hikes?

The date when this situation will become clear will be June 2-3, the ADP national employment report will precede the June 2 state report and tell us the number of non-farm payrolls. The wait here is 295 thousand. On June 3, the official report will come and the expectation will be 320,000. The above-expected numbers will reinforce the decision to continue the rate hike. This signifies an upward trend for the dollar/TL.

June 2-3 will also be the date Turkey’s inflation figure will be announced. Exceeding the 70% figure could lead to a breakout as it would increase the negative real interest rate. From now on, when there was 70% inflation, the deficit was 56 points in 14 interest cases. As this difference increases, Lira’s leak increases, which we all know now…

3- In order to stop the domestic demand for dollars in Turkey, the cost of the currency protected account at 16.40 currencies will be 100-120 billion TL. The future will not come to hold super bonds or inflation-protected bonds, but to pay the cost of KKM! So we will withdraw from one credit card and deposit it on the other credit card. How many somersaults in the air do you think the tumbling pigeon can do?

At the end of this work, it would not be surprising for the Treasury to be overwhelmed with debt, losing its control over the exchange rate and for a double crisis to break out. In short, an “interest + currency crisis” will occur.

4- We can see from the statements of the rating agencies that the situation has deteriorated, which may also have an impact on Turkey’s rating due to the new post-autumn cuts.

The latest international credit rating agency, Moody’s, has announced that there is no update on Turkey’s credit rating.

Watch what the institution said when it downgraded its credit rating from B1 to B2 in 2020, and what it confirmed with its silence yesterday:

“Turkey’s external vulnerabilities could eventually lead to a balance of payments crisis.”

“With heightened risks to Turkey’s credit profile, the country’s institutions appear either unwilling or unable to effectively address these challenges.”

“The financial buffers that have long been the source of credit power are eroding.”

In 2020, Moody’s actually broke down and summarized the event, now the only thing we’ll do from this point on is watch the table.



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