7 Major Developments Of This Week

There were many developments such as the Bitcoin record, gram gold seeing below 400 TL an the announcement of USD/TL estimates.

This weeks developments include the 100th day of the President of the Central Bank of Turkey, Naci Ağbal, the Bitcoin record, gram gold seeing below the critical level and the announcement of USD/TL estimates. Here are 7 major developments of this week..

 

1- 100th Day of CBRT President Naci Ağbal on Duty

There was a reshuffle at the Central Bank of the Republic of Turkey in the last months of last year. The appointment of Naci Ağbal as the head of the CBRT brought the expectation of a change in monetary policy. As the 100th day of Ağbal’s duty was completed, it was seen that these expectations were realized in this process.

The common view of 12 local and foreign experts who evaluated the policy framework in the first 100 days of Naci Ağbal is that the head of the CBRT is a hawk with 3 out of 5. In financial markets, the term “hawk” is used for central bank governors who follow a tight monetary policy and keep interest rates high, while the term “dove” is frequently used for central bank governors who adopt a monetary expansion policy and want to keep interest rates low.

 

2- Gram Gold Saw Gold of 400 TL

Gold, which lost value with the effect of rising Treasury bond rates in the USA and the effect of the strengthening dollar in global markets, experienced a sharp decline and reached the lowest level of 2021. With these developments, gram gold also fell below 400 TL. Gram gold finally found buyers for less than 400 TL on July 20, 2020. With the rise in ounce of gold in global markets and the depreciation of the Turkish Lira against the US dollar in the same period, gold reached record levels by seeing over 540 TL on November 6, 2020.

 

3- USD/TL Estimation of Foreign Institutions

Commerzbank, known as the second largest bank in Europe, revised its year-end forecast for USD/TL exchange rate from 8.25 to 8. The bank expects the dollar rate to complete the first half of 2021 at the level of 7-7.25.

Expressing that global markets reward transparency, Commerzbank Emerging Markets Senior Economist Tatha Ghose said that their main scenario in the medium term is that after inflation decreases slightly, interest rates will return to the level of 15 percent.

While the CBRT kept the interest rate unchanged in February, Morgan Stanley predicted a decision to increase the interest rate of 100 basis points in the near term.

In the report prepared by Morgan Stanley analysts, including Georgi Deyanov and Jaiparan S. Khurana, there were thoughts that the USD/TL rate could decline to around 6.80 in anticipation of a new rate hike.

According to the new research report published by Societe Generale, the 2021 year-end expectations for the USD/TL rate was revised to 6.20, while the short position closing targets for the USD/TL rate was revised to 6.45.

Phoenix Kalen, Societe Generale Emerging Markets Strategy Director, stated in the report that they think the policy rate will not be changed in the first half of the year, and then they expect two 100 basis points cuts in the third and last quarter.

 

4- 20 Percent Price Increase For Medicine

“Decision on Amending the Decision on Pricing of Medicinal Products for Human Use” was published in the Official Gazette and entered into force. Within the scope of this decision, the medicine prices are increased by 20 percent.

In the article added with the presidential decision, following statements were used; “The value of 1 Euro in TL to be used in the pricing of medicinal products for human use cannot exceed 20 percent of the value of 1 Euro applied in the previous period for 2021. On the publication date of this decision, the Price Evaluation Commission meets and announces the Euro value.”

 

5- USD/TL Rate Is Below The Level of 7.00

The USD/TL rate, which started to move down on the first trading day of the week, decreased by 1 percent and reached the level of 7 after 6 months. Almost all of the developing country currencies at the beginning of the new week showed a positive performance against the dollar. The Bloomberg Dollar Index also started the new week with losses. USD/TL was last traded below 7 on August 5, 2020.

 

6- Bitcoin Broke Another Record

Popular cryptocurrency Bitcoin gained more than 5 percent on Wednesday after testing over the $ 50,000 on Tuesday, reaching over $ 51,000 and then $ 52,000. Bitcoin completed the week over $ 55,000 with the Twitter posts of the famous billionaire Elon Musk.

 

7- Industrial Dominance in the Stock Exchange

The recovery in the BIST 100 index in Borsa Istanbul was led by industrial stocks. Thus, the weight of the industrial index in Borsa Istanbul reached the highest levels in its history.

The record levels seen in the market values ​​of the companies in the sector were effective in the increase of the weight of the industrial index in the stock market. Ford Otosan announced a market value of 64.3 billion TL, which is 13 billion TL higher than Koç Holding. With its current market value, Ford Otosan quadrupled its market value compared to 2018.