Deutsche Bank said in a research report it published that Turkey is now more sensitive to the depreciation of the Turkish lira, as the financial burden of currency-protected deposits and foreign currency debts reach 66 percent of the government’s debt.
Stating that the government’s foreign currency debts reached 66 percent and they expect this to increase due to the decrease in the exchange rate in December, the bank said that the exchange-protected deposit application would also increase the financial burden in case of a depreciation of the TL.
Deutsche Bank said, “Therefore, we maintain our view that there will be a large increase in the policy rate in the first quarter of 2022,” said Deutsche Bank, adding that they think that inflation will continue to rise until May.
OVER 50 PERCENT
The bank, which expects headline inflation to rise to 46 percent in January, stated that they think that inflation will rise to 53 percent in May and that inflation will continue to hover above 50 percent until November 2022, unless there is a policy change from the CBRT.
Deutsche Bank said that the Central Bank of the Republic of Turkey may have to increase the policy rate by 1000 basis points to 25 percent towards the end of the first quarter of 2022 due to dollarization, weak Turkish lira and increasing inflation.