After the U.S. dollar/ Turkish lira parity reached 3.63 on Tuesday and closed that day at 3.65, yesterday by noon the dollar/lira parity was quoted at 3.63, while the dollar continued moving upward against the lira later that afternoon, reaching 3.70, a 1.19-percent increase.
The decreasing trend in the parity was stopped with the Chair of the Board of Governors of the Federal Reserve System (Fed) Janet Yellen's speech in U.S. Congress where Yellen hinted that there is no need to wait for an interest rate hike, signalling a possible hike in the March meeting that brought the dollar's tumble to a halt. Speaking to Daily Sabah, Kapital FX Deputy Chief Researcher Enver Erkan said that the positive trend in the dollar/lira parity has been observed for a while.However, the downward movement seems limited in the context of global developments that are increasing the value of the dollar worldwide.
Drawing attention to the fact that the Central Bank of the Republic of Turkey (CBRT) opened a foreign currency depo auction at $1 billion and the market demanded $825 million yesterday, Erkan confirmed that local demand in the real sector for the U.S. dollar also plays a crucial role in the dollar's gains. Furthermore, Erkan pointed out that an interest rate hike expectation from the Fed will also yield an upward moving trend for the greenback worldwide, which also affects the Turkish lira as in other emerging market (EM) currencies.
Erkan specified that the South African rand, the Russian ruble and the Mexican peso also experienced devaluation against the greenback following Yellen's speech. Yet, the Turkish lira does not negatively diverge from other EM currencies in this regard, he added.Moreover, when asked about the possible reasons for the rise of the dollar worldwide and the reaction by the Turkish lira at the beginning of this week followed by another dollar surge yesterday afternoon, Hikmet Baydar, a financial analyst at 3.Göz Consultancy, pointed out that there is no concrete macroeconomic data to back up the dollar surge. He added that political uncertainties in the country and throughout the region, such as the referendum process in Turkey and the ongoing Syrian operations, resulted in a surge in dollar/TL parity.
He noted, however, after a relatively definite environment is established in the political arena, the Turkish lira will again recover. Furthermore, if parity reaches the 3.50 level, then volatility will be relatively stabilized and the parity will return to levels where it is supposed to remain, Baydar claimed.
