Lira Under Pressure: Dollar Crosses 47.70 Threshold as High Deposit Rates Squeeze Corporate Liquidity

Against the backdrop of global market volatility and stringent domestic macroprudential policies, the Turkish Lira continues its depreciation trend against major currencies. As the trading day begins, the USD/TRY pair has climbed above the 47.74 level, while EUR/TRY tests 55.17, escalating import and financing costs for the real sector.

Exchange Rate Pass-Through and the Inflationary Fuel Cycle

The upward momentum in foreign exchange rates continues to distort pricing behavior directly through energy costs. Recent hikes in fuel prices are driving up logistics and production costs, further fueling inflationary pressures:

■The USD/TRY exchange rate is trading at 47.7232 (buy) and 47.7468 (sell) as of early morning.

■The EUR/TRY parity has reached 55.1766, increasing the debt burden on manufacturers borrowing in Euros.

■Recent adjustments in fuel prices (gasoline, diesel, LPG) indicate that exchange rate pass-through will continue to push the Producer Price Index (PPI) upward in the coming months.

SMEs Squeezed Between High Deposit Yields and Credit Contraction

Following the Central Bank's (CBRT) monetary tightening steps and macroprudential measures, deposit rates in the banking sector remain elevated. While the monthly net return on a 1 million TRY deposit continues to attract retail investors, it creates a severe funding cost challenge for commercial loans. The resulting decline in banks' credit appetite has brought access to finance for SMEs—who are desperately in need of working capital—to a near standstill.

This steady upward trend in exchange rates is directly linked to the Central Bank's reserve accumulation efforts and its exit strategy from FX-protected deposits. As a former banker, my observation is that deposit rates exceeding the 50% threshold are severely restricting the banking sector's credit supply. The deceleration of commercial credit growth to historic lows makes cash flow management nearly impossible for SMEs. Every 10-piastre increase in the exchange rate multiplies the working capital requirements of import-dependent manufacturing industries, while macroprudential pressures on bank balance sheets keep the credit taps firmly shut. For the real sector, the coming quarter will be a period where liquidity management serves as the ultimate survival guide.