Local elections to end uncertainty: Markets react as speculations fade

In the free market, the dollar is bought at ₺32.3730 and sold at ₺32.3750 on Friday.

The selling price of the euro, bought at ₺34.9780, is determined as ₺ 34.9800. The selling price of a gram of gold is ₺ 2,325.76. 

Despite perception operations, the dollar rose by 9.8% in the first quarter of 2024. During this period, the Lira deposits (average) gained 12%, gram gold increased by 19%, and the stock index surged by 21.5%, outperforming the dollar.

The Lira deposits gained an average return of 12% during the first quarter, while gram gold and the stock index (BIST100) significantly outpaced the dollar with gains of 19% and 21.5%, respectively.

However, these gains failed to protect against the expected first-quarter inflation, which is predicted to exceed 10%.

Speculative publications harm macro-economic balances

In recent weeks, speculative publications regarding "post-election dollar expectations" have misled the public and harmed Türkiye's macroeconomic balances. 

• Domestic residents' foreign currency deposits, which stood at the threshold of $174 billion six weeks ago, approached the $186 billion mark as of the week ending March 22.
• The total reserves of the Central Bank of the Republic of Türkiye (CBRT), which rose to $145 billion in December, fell to $123.8 billion in the week ending March 22.
• In response, the CBRT raised its policy rate to 50% and defined an upper limit of +3 points to defend the Turkish Lira.

Social media publications should be regulated

Analyzing the interest rate speculations, economist Altug Ozaslan said: "If there weren't so many 'they can't hold the exchange rate' posts on social media, the CBRT wouldn't have burned through so many reserves. Wasn't it said that interest rates couldn't be raised before the elections? It turns out it can be done. Social media publications should be regulated now."

"The Capital Markets Board (SPK) and the Radio and Television Supreme Council (RTUK) could collaborate, and YouTube channels could be intervened with. Uncertain individuals making comments devoid of certain fundamental bases should be prevented from doing so," Ozaslan added.

The current gold selling prices are as followed:

• Gram gold selling price: ₺ 2,325.76
• Quarter gold selling price: ₺ 4,195.00
• Half gold selling price: ₺ 8,118.00
• Republic gold selling price: ₺ 16,383.00
• Gremse gold selling price: ₺ 39,326.18
• Ounce gold selling price: $2,234.70

Reasons behind gold's surge

Despite no significant weakness in the dollar index and U.S. Treasuries in recent times, the enthusiasm for a rise in the price of gold has reached noteworthy levels. In this regard, three main reasons stand out:

• The approach of interest rate reduction processes by the FED and ECB.
• Geopolitical risks in Russia, Ukraine and the Middle East occasionally escalate.
• Central Banks in Asian countries, particularly China, and increasing demand for physical gold support global gold prices.
• In the domestic market, gram gold, supported by exchange rates, is also witnessing high demand as a hedge against high inflation and uncertainties.

Source: Newsroom