Page 5 - TURKRptJun22

The war in Ukraine is a new normal now. But relative stabilisation in commodity prices (compared to the wild rides seen in February and March) has occurred at significantly higher prices, while the stress in commodities directly related to Russia or Ukraine (such as wheat, sunflower oil, natural gas) continues.
On May 9, the USD/TRY pair broke the 15-barrier. By May 16, the regime was defending the 15.50-level. By May 24, it was defending the 16-line. Since then, it has been defending the 16.50-line.
So, what we have could be described as an undesirable but still controlled devaluation. All eyes are on where the exchange rate might stabilise.
Unknown is how much is flowing into the central bank’s account from the lira deposit protection scheme and exporters/tourism companies, while the reserves continue to decline.
If the Erdogan regime can manage to get through May, it could enjoy a less troubled two-month period until the summer liquidity dry shake-up in August. This does not mean a shift in the lira’s secular trend to the north pole.
Some relaxation is already observable in the yield on 10-year US Treasury papers and in the USD index (DXY). However, the current situation is a long way from normality. Don’t dispense with the idea that a colossal meltdown could be ahead.
An uninterrupted decline in the USD/TRY would also be no surprise under the current global and domestic dynamics. The world, led by the Fed, is tightening monetary conditions (the supply of the numerator of the USD/TRY is declining) while the Erdogan regime is pumping in more loans (the supply of the denominator is increasing).
Rapid grocery deliveries player Getir intends to axe 14% of its staff globally due to rising global inflation and costs. The liquidity boom during the pandemic also boosted tech start-up valuations. The upcoming period will also be a stress test for the tech industry.
Turkey’s energy ministry delayed the YEKA GES-5 (Renewable Energy Source Areas, Solar Power Plants-5) tendering round.
On May 31, the ministry collected initial bids under the YEKA RES-3 (Renewable Energy Source Areas, Wind Power Plants-3) round.
On June 21, it will collect initial bids under the YEKA GES-4 round.
5 TURKEY Country Report June 2022 www.intellinews.com