USD/TRY: Pace of TRY depreciation moderates lately
Inflation data show that the downtrend since last October seems to have come to an end. We are likely to see an increase in the headline number ahead given the FX pass-through from recent lira weakness, continuing strength in demand and potential adjustments in administered prices.
Given the current pace of fiscal spending, leading to a rapid widening in the budget deficit on a year-to-date basis, the government announced a number of measures to increase revenues and control the widening in the deficit.
While FX reserve levels are quite low and require efforts to build up, there has been a rapid increase in recent weeks with less involvement by the central bank in the FX market. After a rapid increase following elections, USD/TRY gains have slowed.
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Inflation data show that the downtrend since last October seems to have come to an end. We are likely to see an increase in the headline number ahead given the FX pass-through from recent lira weakness, continuing strength in demand and potential adjustments in administered prices.
Given the current pace of fiscal spending, leading to a rapid widening in the budget deficit on a year-to-date basis, the government announced a number of measures to increase revenues and control the widening in the deficit.
While FX reserve levels are quite low and require efforts to build up, there has been a rapid increase in recent weeks with less involvement by the central bank in the FX market. After a rapid increase following elections, USD/TRY gains have slowed.