Conditions of financing worsened in the last months of the year.

Turkish lira exhibited a relatively stable performance until September 2021, apart from the volatility in March. Indeed,during the period between January and early September, devaluation of Turkish lira against the USD remained limited to slightly over 10%.

Beginning from September, the monetary easing cycle introduced by the Central Bank of the Republic of Türkiye (CBRT) led to drastic devaluations of Turkish lira against USD. Starting the year at 7.4, Turkish lira exchange rate closed at the level of 17.5 against the dollar on December 20, climbing by 135%. Despite a slight decline following the measures taken USD/TRY towards the end of December, the exchange rate closed the year at the level of 13.3 with an increase about 80%. The exchange rate averaged 8.9 in annual terms, rising by 27% over the previous year.

Although the interest rate cuts by the CBRT led to a slight decline in the commercial loan interest rates between September and November, the market turbulences observed beginning from the December gave rise to a very rapid escalation in the loan interest rates, with the commercial loan rates closing the year at a very high level with 24,4%. Nonetheless, it should be noted that the levels reached were still below therate of inflation.

In summary, financial conditions, which were favorable during the most part of the year, worsened especially during the last quarter. Industrial companies were also affected by the fluctuations in the market indicators and consequently their future oriented expectations were upset.