Central Bank injects $4.6 bln into market

ISTANBUL

The Turkish Central Bank (TCMB) injected 29 billion Turkish Liras (nearly $4.61 billion) into the domestic market at a one-week repo auction on March 13, with bids amounting to 62.25 billion liras.

The simple interest rate applied was 10.75 percent, whereas the compound interest rate was 11.34 percent.

In the meantime, the expectation of the year-end dollar/lira exchange rate has risen from 6.45 to 6.51, according to a monthly survey conducted by the TCMB among business organizatisons, financial instutitions and professionals.

The 12 months onwards average estimate of dollar/lira exchange rate also increased from 6.51 to 6.66, whereas the end-of-the-month expectation was 6.20.

The dollar/lira exchange rate rose to 6.31 in the early trade on March 13, versus 6.27 at the previous close. Lira recovered to 6.29 as of 4:19 p.m. Istanbul time.

Economists expect Turkey’s central bank will cut rates by as much as 100 basis points in its Monetary Policy Committee meeting on March 19, which would take the policy rate, at 10.75 percent, into single-digits.

Turkey is the world’s sixth-largest tourist destination but waves of travel restrictions and cancellations could pinch a sector that accounts for some 12 percent of the import-dependent economy.

The TCMB has applied an aggressive easing cycle since July, when the policy rate was 24 percent.

Yet while the currency has fallen more than 5 percent this year, an emergency rate cut last week by the U.S. Federal Reserve helped the lira stem some losses against the dollar.

Turkey, which imports virtually all its energy needs, would also benefit from a standoff between Russia and Saudi Arabia that has sent oil prices plunging.