Dollar breaking limits shook developing currencies

Spherical The dollar has been creating a storm in the markets, especially since the US Federal Reserve (Fed) interest rate meeting on September 20. Recently, the Federal Reserve has maintained its hawkish stance, finding support in successive strong economic data, and upward pressure on US bonds has allowed the dollar to strengthen globally; The dollar index (DXY) recorded the longest rise in the last 9 years. While the strong dollar put selling pressure on many asset classes, gold also took its share, retreating to its lowest level in six months. The rise of the dollar index to 106.84 also shook the currencies of developing countries.

PUSH TL

Emerging currencies that have been the strongest against the dollar since September 20: Philippine peso (0.40%), South African rand (0.34%), Indian rupee (0.05%). On the other hand, the currencies of 10 developing countries, including the Chilean peso (-2.72%), the Brazilian real (-3.04%) and the Colombian peso (-3.90%), as well as the Turkish lira (-1.43%), rose in 9 days and lost more than 1 percent of its value against the dollar. The pressure of the “strong dollar” had its effect on TL, where controlled depreciations were allowed. The dollar renewed its record this week with 27.64 TL. Ata Yatırım Treasury Deputy Director General Etem Öztekin stated that this situation puts pressure on TL, as in all developing countries, and said: “Especially in the difficult economic period we are going through, although vulnerabilities have begun to decrease until certain point, there is still a way out of Exchange Rate Protected Deposits (KKM): “It is a fact that will make economic management difficult, which pursues two main objectives: and reduce inflation.”

You cannot be ‘orthodox’ again if the lira remains stable

T.L.Robin Brooks, chief economist at the Institute of International Finance (IIF), who has been trying for years to find the fair value of , but failed to achieve the goal, said in his latest post: “Turkey is trying to signal a return to orthodoxy, but this is not possible as long as the Turkish lira is stable.” Brooks, who has praised Turkey’s potential in the past, did not find policies aimed at returning to rationality “orthodox.” Brooks continued his post: “The only thing foreign investors are seeing right now is a fix before the May elections, then a devaluation and now – probably – a new fix before the March 2024 elections. “This is not orthodoxy…” he said.