Turkish Central Bank investigates TL depreciation

Central Bank of the Republic of Turkey (CBRT) Governor Murat Çetinkaya evaluated the recent fluctuations in the foreign exchange rates as an "attack," informing that the bank was investigating the origin of the attack. In a presentation at the Planning and Budget Commission in Parliament Tuesday, Çetinkaya informed the members about the latest developments in the economy. During the four-hour meeting, Çetinkaya cited that the high levels of inflation and inflation expectations were risks over pricing behaviors. He said a weak Turkish lira and high imports were the reason for the increased inflation in the country.

In his presentation, Çetinkaya also said the bank's monetary policy decisions will continue to be shaped with an effort to maintain price stability, adding that the steps to be taken in the structural areas are expected to support the sustainable price stability. Meanwhile, concerns that the U.S. and Russia will face off in Syria continue to have a negative impact on the markets. In a provocative tweet yesterday, U.S. President Donald Trump responded to Russia's recent warning on responding to any attack targeting the Assad regime, declaring that missiles "will be coming" and blasting Moscow for standing by Bashar Assad, the usual suspect of the alleged chemical attack in Syria's Douma.

The rise of the dollar and the euro against the Turkish lira continued yesterday, as the dollar/Turkish lira exchange rate increased to 4.1819 as of 3:45 p.m. local time. It was 4.1340 at Tuesday's close. The Turkish lira weakened to 5.1792 against the euro, compared with Tuesday's close of 5.1130.