- US Inflation Data Released
- China’s Economy Slowed Down
- The Central Bank of Turkey Changed the Required Reserve Ratios for Foreign Currency Accounts
US Inflation Data Released
The US Department of Labor announced the Consumer Price Index (CPI) data for August. In the US, the Consumer Price Index (CPI) increased by 0.3 percent month on month and 5.3 percent annually, below expectations. The expectation was 0.4 percent. CPI data increased by 0.5 percent monthly in July.
Accordingly, the cost of living of American consumers increased by 0.3 percent in August compared to the previous month. CPI data, which followed a course below market expectations, increased by 0.5 percent monthly in July.
CPI in the country followed a course in line with expectations, increasing by 5.3 percent on an annual basis in August. Annual inflation was 5.4 percent in July, the highest level since 2008. Despite the slowdown in this period, annual inflation continued to hover above 5 percent. The increase in fuel, food, and housing indices was effective in August’s monthly rise in consumer prices. The highest monthly increase in this period was realized in the fuel price index with 2.8 percent. While the energy index increased by 2 percent monthly, the index for energy services increased by 1.1 percent. The index for food prices also increased by 0.4 percent in the same period.
Core CPI, which does not include variable energy and food prices, increased by 0.1 percent in August. The market expectation for the core CPI was 0.3 percent monthly increase.
China’s Economy Slowed Down
The Chinese economy weakened further in August as the government implemented strict measures to contain the spreading Covid-19 outbreak, resulting in reduced consumer spending and travel during the summer holiday period.
Compared to last year, the rate of increase in retail sales fell sharply to 2.5 percent. According to the estimates of economists surveyed by Bloomberg, this increase was expected to be at the level of 7 percent. Industrial production, which is expected to increase by 5.8 percent, increased by 5.3 percent. Fixed capital investments increased by 8.9 percent in the first eight months of the year, in line with the expectations. The unemployment rate remained unchanged at 5.1 percent.
In a statement after the data, the Chinese Bureau of Statistics said, “Virus outbreaks and natural disasters have adversely affected the economy. While the economy continued to recover in August, the international environment was complex and challenging, and natural disasters such as domestic virus outbreaks and floods impact the economy. “The economic recovery still needs to be strengthened,” he said.
The Central Bank of Turkey Changed the Required Reserve Ratios for Foreign Currency Accounts
According to the communiqué published in the Official Gazette dated September 15, the required reserve ratio was increased by 200 basis points. With the amendment made in the second paragraph of article 6 of the Communiqué, the required reserve ratio increased to 23 percent for demand and foreign currency accounts with a maturity of up to one year. The required reserve ratio in foreign currency accounts with maturities of 1 year and longer than one year was 17 percent.
In the statement made by the CBRT, it was stated that as of October 1, 2021, required reserve facilities in the Turkish lira are expected to increase by approximately 13.9 billion Turkish liras and required reserve facilities in foreign currency and gold by approximately US$ 3.4 billion.
On 1 July, the CBRT lowered the maximum rate of the possibility of maintaining Turkish lira-required reserves in foreign currency from 20 percent to 10 percent and increased the required reserve ratios applied to foreign currency deposits and participation funds by 200 basis points in all maturity brackets. With this decision, it was foreseen that the CBRT’s required reserve facilities in foreign currency would increase by approximately 2.7 billion dollars.
Recently, an increase was observed in the CBRT’s reserves with the contribution of swap agreements and special drawing rights from the IMF.
As of the week of September 3, total reserves increased to 119.2 billion dollars, while gross foreign exchange reserves increased to 78 billion dollars.