The Turkish lira extended its downward pattern against its US peer on Thursday as the drop-off in the broader financial markets weighed on the currency. The lira, which had been one of the top-performing currencies in the last three months, has experienced a tremendous sell-off. Can the lira return below the 7 mark again?
According to the central bank, foreign exchange reserves climbed to $54.5 billion in the week ending February 26,, up from $53.86 billion in the previous week. This is the sixth consecutive week that forex reserves have topped $50 billion. It also is the best reading since the end of June.
Turkey’s forex reserves took a nosedive, peaking at $40 billion in early November as the central bank attempted to prop up the lira against multiple currencies.
Earlier this week, it was reported that Turkey became one of a few major economies to record an economic expansion during the COVID-19 pandemic in 2020. China was one of these other countries. In the fourth quarter, the gross domestic product (GDP) growth rate was 1.7%
Also, the Istanbul Chamber of Industry manufacturing purchasing managers’ index (PMI) slumped to 51.7 in February, down from 54.4 in January.
Investors homed in on inflation data for February. The consumer price index (CPI) eased in February, sliding to 0.91%, down from 1.68% in January. The producer price index (PPI) also declined to 1.22% last month, down from 2.66% in the previous month.
In other news, the agriculture and forestry minister confirmed that Turkey’s agricultural industry recorded 4.8% year-over-year growth in 2020, the best performance in three years. Its agriculture exports also jumped 5% to $20.7 billion.
Perhaps seeing reports of a commodities supercycle, Turkey is expected to increase gold mining production to all-time highs. Last year, Ankara’s output peaked at 42 tons, but it could top 45 tons by the end of 2021.
Moreover, Fitch Ratings upgraded its Outlooks on Turkey Wealth Fund’s (TWF) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) to stable, up from negative.
The USD/TRY currency pair rose 0.85% to 7.5250, from an opening of 7.4618, at 19:26 GMT on Thursday. The EUR/TRY edged up 0.03% to 9.0038, from an opening of 9.0026.