Central Bank of the Republic of Turkey, from the care and care is an institution that must be protected!
With an unexpected administrative decision over the weekend, CBRT President Mr. Ağbal was removed from office. Subsequently, the departure from the Istanbul Convention created an earthquake effect on Turkish financial markets.
In particular, Mr. During his 4-month working period, Ağbal earned the trust of the markets and raised the reputation and credibility of the CBRT.
The panic that the new president Kavcıoğlu, who has taken over the task, will abandon the lane that Ağbal has opened, that is, the communication favorable to the market, the inflation-oriented monetary policy stance and return from the sheet of route, in short, orthodox policies. accumulating reserves, collapsed like a nightmare in TL.
Naturally, the new President Kavcıoğlu made a press release yesterday, highlighting the priority of fighting inflation, stating that an extraordinary meeting of the MPC will not take place and that the meetings of the CBRT MPC will be held as scheduled, and tried to break the perception that interest rates can be lowered immediately.
Subsequently, President Kavcıoğlu’s meeting with the bankers declared that there would be no change in the policies of the CBRT and Mr. Although it was stated that the policies of the Ağbal period would be preserved, the climate did not improve.
On Sunday night, initial quotes that emerged with the market opening late at night indicated a 16% increase in the USDTRY exchange rate compared to Friday’s close. The USDTRY rate, which tests the 8.40 level in the period when liquidity drops overnight, cannot help without wondering.
In November, when Mr. Ağbal took office, the USDTRY rate broke a record at 8.50, while the 5-year CDS risk premium was based at 520 basis points. On Friday, the USDTRY 7.20 CDS rate risk premium fell to 300 basis points, a painful prescription written by rising interest rates, Turkey $ 15 billion of foreign inputs have stopped melting into reserves, the speed of love for foreign currency of domestic residents decreased, why such decided to return to November again?
According to Friday, when showing Turkey’s risk to foreign eyes of the 150bp 5-year CDS risk premium, it is necessary to take into account that it rises to the level of 450 points. Reestablishing credibility in the eyes of investors should be quick!
In the new week, when the perception begins with a rather bad perception, the attitude of domestic residents at home, whether state banks will take the defensive in parallel with this, and, of course, the course of TL interests (TL off-shore) training abroad will be of great importance.
A major increase in TL market rates during the day can lower the USDTRY rate from the high fever zone in the more liquid market. We can say that Borsa Istanbul will start the day with a considerable decline, and a pessimistic price is expected for TL and TL assets in general.
On the first business day of the week, a complex course prevails in the Asian markets. The Japanese stock market is 1.6% lower; The Chinese stock market is trading 1% higher. The Nasdaq diverges with a 0.6% increase in US stock futures.
On the financial markets agenda, today the stock of central government debt can be tracked and the sales of second-hand homes in the US can be tracked. Statements from the authorities should be followed carefully and procedures should be avoided. panic.
In the shadow of this demoralization, I ask you to excuse the tired, insomniac and reluctant phrases that flow from the computer keyboard. I am very very sorry!
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