The Turkish Lira is currently revaluing. The following chart shows the US Dollar vs. the Turkish Lira since August 27th. The current Dollar loss (Lira increase) can be seen very clearly here. Since this morning at 9 a.m. USD vs. Turkish Lira loses from 5.83 to 5.79. After relatively small movements in the last days this is already a clear fluctuation!
Turkish Lira rises thanks to GDP data
The Turkish Lira is currently revaluing because the Turkish Statistical Office published data on Turkish economic output (GDP) in the second quarter at 9 a.m.. And that’s where it gets interesting. We could also say that the figures are a matter of opinion. Every observer can pull out what he wants. The currency market regards the data as clearly positive, because it obviously concentrates on the quarterly comparison of GDP data, i.e. the change from the 1st to the 2nd quarter of 2019. There is an increase of 1.2%. Expectations were lower. So: Good economic performance, rising Lira.
But if we look at the year-on-year comparison (chart bottom right), we see a decline. The last three quarters have been down 2.8%, 2.4% and now 1.5% year-on-year. A marked decline in economic output when this approach is used. But let’s go back to the comparison from quarter to quarter. Turkey had already left the recession again in the 1st quarter of 2019. So: The currency market is currently pushing the Turkish Lira up due to the good GDP figures.
Flash Crash Review and Central Bank Preview
We would like to point this out again: On 12th of September the Turkish Central Bank will announce its interest rate decision in parallel with the ECB (probably 45 minutes earlier, at 1 p.m.). Is this the second time in a short space of time that it will significantly lower interest rates for Turkey? At the first cut of 4.25%, the Turkish lira strengthened instead of falling. What will happen this time? Furthermore this interest rate decision remains the most important date of the next days for observers of the Lira. And we want to take another look at the big picture at this point. On August 26th there was the flash crash in the lira, triggered by gamblers in Japan. But the Dollar and Euro vs. Lira were also influenced by it, whereby USD vs. Turkish Lira shot up to 6.30 (clearly visible in the chart). This is why the other chart movements seem so tiny, including the current increase in the value of the Lira (USD vs. Lira decline).