Page 21 - bne IntelliNews Turkey Outlook 2024

7.0 Energy & Power
In 2023, energy prices in Turkey kept breaking records due to lira depreciation and tax hikes, despite declining prices on global markets.
In 2024, global prices are expected to rise over the reversal in monetary tightening. Turkey is getting ready for some fresh records.
8.0 Markets outlook
8.1 FX
Turkey’s trade and current account balances are always in deficit and the country’s external liabilities are heavy. As a result, the lira follows a secular depreciation trend, with some retreats during monetary tightening intervals.
The Erdogan regime is still applying a controlled currency regime. The central bank closely follows FX transactions on the interbank money market. It still limits transaction hours.
The government still seizes 40% of export and tourism revenues.
Turkey will not consider lifting its restrictions on the London offshore swap market before achieving a strong policy rate buffer over the inflation rate, unnamed people with knowledge of the discussions told Bloomberg on October 9.
Since 2018, when the lira entered the first phase of its unprecedented collapse, the lira squeeze on foreigners has been followed by periodically booming lira costs on the London offshore swap market.
Turkish banks are informally ordered to cut the lira supply on the market to prevent foreign traders from shorting lira, particularly when the stress on the local currency is high.
In 2022, Turkey’s capital markets board, SPK, also ordered local banks not to market supranational bonds, namely lira bonds sold by foreign banks, to their customers. These papers are an alternative way to access lira.
Following the local elections at the end of March, the beginning of a gradual lifting of restrictions on London is expected.
The regime has so far delivered a smooth and limited devaluation in its bid to attract portfolio inflows. The Turks remain relatively relaxed, as sharp moves on the FX markets are not taking place.
21 Turkey Outlook 2024 www.intellinews.com