The Turkish lira rose today despite slowing inflation and prospects for interest rate cuts from the nation’s central bank.
Turkey’s annual inflation rate dropped to 15.7% in June from 18.7% in the previous month, touching the lowest level in a year. Furthermore, it was the steepest decline in eight months. And on top of that, the annual core inflation rate slowed to 14.9% in June from 15.9% in May. It was the lowest rate since July of the last year.
Slowing inflation reinforced the outlook for interest rate cuts from Turkey’s central bank. Carla Slim, economist at Standard Chartered, said:
The June CPI print helps pave the way for the Central Bank of the Republic of Turkey (CBRT) to kickstart its easing cycle at the 25 July MPC with a 100bps cut.
We have been more cautious than others in our rate cut call â we see a 200bps cumulative cut in 2019 â given turbulent markets and political noise relating to the March local elections, the Istanbul mayoral re-run and the S-400 anti-missile system deliveries.
USD/TRY fell from 5.6523 to 5.6324 as of 16:02 GMT today, and its daily low was at 5.6083. EUR/TRY declined from 6.3906 to 6.3502, touching the session minimum of 6.3266 intraday.
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