By Samir Al Khoury,

Although the Turkish Central Bank continued to set interest rates at 50% for the third consecutive time at its meeting on May 23, 2024, the consumer price index (CPI) on an annual basis in Turkey remains very high, recording 75.45% in May. This figure exceeded expectations (74.80%) and the previous reading (69.80%), marking its highest level since November 2022. The producer price index (PPI) on an annual basis in Turkey also recorded 57.68%, surpassing the previous reading (55.66%) and reaching its highest level since March 2023.

The real interest rate is still negative, indicating a significant gap between the nominal interest rate and the inflation rate. This situation may push the Turkish Central Bank to tighten its monetary policy further by raising interest rates to tame inflation.

The Turkish lira continues to deteriorate against the US dollar, with the exchange rate hitting 32.6537 today, a historical record level, and currently hovering around 32.50 liras per dollar.

From a technical standpoint, it appears that the upward trend for the dollar against the Turkish lira will prevail in the next stage. The positive momentum for this pair continues, as indicated by the relative strength index (RSI), which is at 68 points and approaching the overbought area. The MACD indicator, colored blue, also exceeds the SIGNAL LINE, colored orange, in the negative zone.

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

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