CUT IN JULY IS A TOSS-UP
between China and the U.S. At the same time, there is a persistent Iran-U.S. geopolitical uncertainty and high tension. Nevertheless, expectations for the USD remain stable.
Domestically, July started with high expectations from the government for the economy. All the deferred consumption and expectations from the first and second quarters of the year accumulated and reached a critical point. Today, the USD-based chart is holding at 98. However, it can’t go over 99 and looks stuck. The most noteworthy event of the week was the dismissal of the Central Bank governor. Despite all this, domestic markets did not respond with dramatic declines and preferred a horizontal course.
Let us assume that the Monetary Policy Committee will reduce the weighted average funding cost, which stands at 23.87-23.86 percent, by 300 basis points at the July 25 meeting. There is uncertainty as to how the new interest rate at 20.87 - 20.86 percent will affect the USD/TRY, the economy and foreigners. Whether the market, economy and investor will like or dislike it is a toss-up.