Markets are still affected by this trend of trying to control inflation through rate hikes. And for the last two days, I’ve been trying to point out that no one is paying real attention to the “cost” aspect of the problem. Sadly, a lot of experts are providing outdated economic solutions to the problems of a tech-driven world. For instance, some of these experts are trying to solve the “sharp increase in potato and onion prices” problem using the “cobweb theory”. The essence of the matter, however, is the fact that a significant amount of harvested potatoes and onions are left to rot away in warehouses. Instead, people are looking for easy answers as it is not easy at all to face the reality.
Yesterday, benchmark rates hit 20% as USD/TRY tends to drop. A decreasing USD/TRY vs. increasing interest rates before the close of the final session clearly shows that investors are still confused as also confirmed by BIST’s sharp close yesterday. As market actors have been betting without trying up too much of their money for too long now, they started to fear the volatility which was created by them in the first place. They content themselves with closing the day with low profit or small losses.
As oath-taking ceremony on July 9 approaches, there is some serious lobbying going on about the future economy officials team of the President. I might say that the names that have been announced so far were only released to measure reactions. I listened to some very different comments about the potential candidates for ministries, especially before the Turkish Exporters’ Assembly elections.
“Desire for radical change…”
The new cabinet will finally be announced on Monday. The fact that several top ministers are expected to keep posts in new cabinet will lead to positive as well negative reactions. A radical change in economy officials’ teams is strongly desired by the market. We’ll see what happens.