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Societe Generale anticipates the Turkish Central Bank (CBRT) will maintain its one-week repo rate at 37.0% and retain a hawkish stance. The bank highlights that effective funding rates have already risen to 40% via the overnight lending facility. CBRT’s strategy includes heavy use of foreign exchange reserves and liquidity drainage to stabilize the Turkish Lira (TRY). This approach reflects ongoing efforts to combat inflation and currency volatility amid global economic uncertainty. For forex markets, the CBRT’s decision signals continued monetary tightening, which could strengthen the Lira against peers like the Euro (EUR/USD). Traders should monitor how sustained hawkish policies impact Turkey’s trade balance and capital flows. A stable Lira may reduce import costs but could also slow domestic economic activity. The policy’s implications for Gulf investors are significant. A resilient Lira supports Turkey’s trade relations with the MENA region, but high interest rates might deter foreign investment. Investors should watch CBRT’s FX reserve usage and inflation data for clues on future rate adjustments. The EUR/USD pair remains a key benchmark for assessing regional currency dynamics.
