Dollar up before inflation

After testing above 5.40 for the first time since January 16, on Friday, parallel to the sharp depreciation in emerging market currencies, the Dollar/TRY started the first day of the week, which will be followed by the inflation data, at around 5.38. After climbing to 5.40 on Friday, the exchange rate, which fell to 5.37 at the close, was traded at 5.3800 at 09:20 today. Euro/TL, which tested 6.15 on Friday, was also at 6.1160 at the same hour. The dollar index is flat at 96,448.

Inflation expectations

The Consumer Price Index (CPI), which will be announced at 10:00 am, is expected to increase by 0.4 percent on a monthly basis in February, when the regulation sales started after the sharp increases in food in January, while annual inflation is expected to decline to 19.9 percent. Annual inflation hit the record level of the last 15 years with 25.24 percent in October, then fell to 20.35 percent in January. Although regulation sales are not included in the price mechanics of TURKSTAT, it is expected to support a year-on-year decline in food prices due to lower market prices. CPI increased by 1.06 percent in January, the previous month, due to the sharp rise in food prices, which was closely monitored due to bad weather conditions. In January, the highest monthly increase was observed in the food and non-alcoholic beverages group with 6.43 percent, while annual inflation in this item reached a very high level with 30.97 percent. Tacirler Investment Chief Economist Özlem Bayraktar Gökşen, on the effect of arranged sales on inflation, said, “Due to the calculation standards of TURKSTAT, we will not receive a price from the regulation. However, we see that the regulation sales data are also reflected in the markets. Due to its reflection on the markets, it will have a downward effect on the food prices. However, considering the structural problems, it will be permanent. “We don’t expect any improvement,” he said. Economists expect inflation to hover around 20 percent in the first half of the year and may even increase slightly with possible changes in cigarette prices. In June, sharp decreases in inflation are expected due to the base effect. However, due to the base effect, an upward effect on inflation is expected this time in the last quarter of the year.

The main developments in the markets are as follows:

– Minister of Foreign Affairs Mevlüt Çavuşoğlu stated that they have received a positive response on the Patriot missile defense systems, for which an answer has been expected for almost 2 years, and that negotiations have begun. – US President Donald Trump reiterated his criticisms of the Fed and stated that the Fed’s tight monetary policy contributed to the strong dollar, which in turn harmed the competitiveness of the USA. Trump also said that he will emerge with a great victory in the 2020 elections and will sign a victory. – It was stated that the international investment bank Goldman Sachs, which was mentioned in the public development fund (1MDB) corruption investigation in Malaysia, could be fined up to 9 billion dollars by the US judiciary. – International credit rating agency Moody’s upgraded Greece’s credit rating by two notches. – Canada has approved the initiation of the extradition process of the Chinese telecom giant Huawei’s senior manager Meng Wanzhou to the United States. – The Wall Street Journal wrote that, given the progress made in trade talks between the US and China, US President Donald Trump and Chinese President Xi Jinping may reach an official trade agreement at a summit to be held around March 27. – The US Special Representative for Syria, James Jeffrey, will come to Turkey today.