Created
: 2025.08.01
2025.08.01 19:35
The Turkish Lira (TRY) exchange rate remains on a steady depreciation path, especially against non-USD currencies. Against a 50-50 basket (USD and EUR), its depreciation rate is quite rapid -c.43% annualised. Since that writing, the US Dollar (USD) has rebounded somewhat and this makes the Lira's depreciation clear also in USD/TRY terms (USD/TRY breached the 40.60 mark yesterday), Commerzbank's FX analyst Tatha Ghose notes.
"On the fundamental front, there was further bad news yesterday in the shape of trade data for June: the external trade deficit widened significantly in June (by 39% year-on-year) to US$ 8.2bn, marking the third successive deterioration. After seasonally adjusting the trade data, we found that there was a sharp month-on-month drop in exports, while imports increased. This picture is the opposite of what we might conclude if we were only looking at (misleading) year-on-year figures - in year-on-year terms, imports were up 15.2%y/y, driven by 32.2%y/y increase in consumer imports, while exports were also up c.8%y/y."
"The worse performance of exports was confirmed even by year-on-year data. But crucially, the increasing imbalance in terms of large consumer goods imports (as opposed to capital goods imports) also makes for a structurally weaker story. The trade imbalance stems from still robust domestic demand, which raises question marks about how effective CBT's tight monetary stance has been in cooling and re-balancing the economy."
"Taken together with other recently observed balance of payments indicators, such as the continued decline in international reserves (net of swaps) in June and the re-widening net FX position of corporates, these trade figures contribute to an unfavourable backdrop for the Lira."
Created
: 2025.08.01
Last updated
: 2025.08.01
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