Turkey’s consumer confidence dropped to 83.5 in July, down from 85.1 the month before. This decrease shows a change in how consumers feel about their finances and the economy overall. Consumer confidence indices help us understand the average person’s view on their financial situation and the economy. Changes in confidence can indicate how likely people are to spend money in the future.

Factors Affecting Consumer Confidence

The fall in the index suggests that we should expect lower spending in Turkey soon. When consumer confidence is low, it often leads to decreased activity in retail, automotive, and other sectors that rely on consumer spending. As a result, investment strategies should consider a more cautious approach toward companies that depend on local consumption. This low confidence level is closely tied to ongoing inflation in Turkey. Official figures show the annual inflation rate was 75.45% in May. High prices reduce how much households can afford, which helps explain the decline in consumer confidence. We expect this issue will continue to impact the performance of consumer-focused stocks. Given these conditions, we foresee more pressure on the Turkish Lira, which has already weakened to over 32 against the U.S. dollar this year. Traders might consider using options to prepare for further declines in the currency. The drop in confidence strengthens the fundamental issues affecting the exchange rate.

Strategic Market Positioning

For the BIST 100 stock index, buying put options provides a direct way to protect against possible market downturns. Historically, times when consumer confidence stays below 85 often lead to corrections in the stock market. Therefore, being defensive is a wise strategy in the coming weeks. However, we should also recognize the central bank’s efforts to combat inflation, with the policy rate set at 50%. This traditional monetary policy aims to stabilize the economy. If these measures show positive results, it could lead to sharp, short-term changes, so positions should be monitored closely. Create your live VT Markets account and start trading now.

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