The Central Bank of the Republic of Turkey (CBRT) cut its one-week repo rate, which was 18 percent at its tenth Monetary Policy Board (PPK) meeting yesterday, to 16 percent, down 200 basis points (bp).
In the TRNC free markets, the rise in rates, which marked the trading week we left behind was replaced by a terrible negative divergence in TL assets after the decision.
At the close of the fourth trading day of the week in Northern Cyprus, the US Dollar averaged TL 9.5293, euro 11.0954 TL and British Pound 13.1545 TL.
an interest rate cut in the range of 50 to 100 bp was expected this month following a 100 bp interest rate cut in September 2021.
The Bank cut interest rates in a band above expectations, while the decision text stated:
“Inflation has been on the rise recently; supply-side factors such as increases in import prices, especially food and energy, and disruptions in procurement processes, increases in managed/directed prices and demand developments due to opening are effective.
These effects are considered to be due to incidental factors.
The USD/TL rate, which was traded at 9.28 in the Turkish free markets before the interest rate decision, rose to 9.48 after the decision; The euro/TL pair, which was at 10.80 before the decision, also reached 11.04. Gram gold set a record by going from 532 TL to 545 TL.
inflation in the TRNC is 18 percent and the minimum wage increase is 12 percent, and that the purchasing power of Turkish Cypriots has melted in the 28 percent band since January 2021 alone, given the euro used in Cyprus and the ‘de facto’ currency of Northern Cyprus, the British Pound and the US Dollar/TL pair.
70% of the TRNC’s imports originate in Turkey, and that Northern Cyprus is no longer just commodities from Turkey with the latest developments;
