Preliminary export data weighs down on lira

The Turkish Exporters Assembly announced that Turkish export performance worsened during July, driven by weaker-than-expected exports to the EU. Headline exports are estimated to have declined by a sharper 13% y/y in July than the 7% in June. This is lira negative. 

Commerzbank says, "We had been looking for Turkish exports, especially to the Eurozone, to stabilise as the German economy recovered; but this has not occurred."

Exports to Russia and the mid-east of course remains sharply down y/y but at least this was not unexpected. In fact, exports to the mid-east had a slightly better month in July after Iraq removed a ban on Turkish poultry import. 

According to Commerzbank, "the exchange rate remains under significant pressure, with the TRY basket (50% EUR and 50% USD) hovering around its all-time high of roughly 2.93 with a tendency to break to the upside. The conditions for a rate hike are intensifying."