Turkish exporters see the rise in the euro/U.S. dollar exchange rate as a potentially beneficial development, an expert opined recently, while the uncertainties over the independence of the Federal Reserve (Fed) continued to fuel concerns.
U.S. President Donald Trump is reportedly considering selecting a new name to chair the Fed in September or October. The Fed's likelihood of making three rate cuts by the end of the year increased, causing the euro/U.S. dollar exchange rate to rise to 1.1745 this week, a nearly four-year high.
The decline in the U.S. dollar showed that investors responded to Trump's decisions by selling their dollar assets, putting downward pressure on the U.S. Dollar Index, which fell to 97.076 on Thursday, its lowest since March 2022.
Tonguç Erbaş, general manager of Türkiye-based financial services firm Ahlatci Portföy, told Anadolu Agency (AA) on Friday that the rise in the exchange rate has been positive for Turkish exporters, and the European Central Bank (ECB)'s tight monetary stance to bring down the bloc's inflation to 2% also contributed to the rise.
Erbaş stated that the ECB is gradually easing its policy to bring stability to the EU economy, while concerns over tariffs are largely limited, boosting market confidence. Meanwhile, the Fed remains cautious amid debates that Trump could likely install a "shadow chair" to the Fed.
"The rise in the euro/U.S. dollar exchange may have been positive for Turkish exporters because half of Türkiye's exports go to Europe, but most of our imports are dollar-based," he said.
"The rise in the exchange rate is allowing euro-based revenue to increase when converted to Turkish lira," he added.
Erbaş noted that the Turkish industrial sector in particular could benefit from the exchange rate, but the exchange rate risk on the import side needs to be monitored closely.
Türkiye's exports totaled $110.9 billion in January-May this year, 39% of which were to the EU, up 7.5% versus the same period last year, according to the data from Turkish Exporters' Assembly (TIM).
