Turkish Central Bank Implements another Significant Rate Hike!
The Turkish Central Bank (CBT) has taken another important step, raising its key rate by 2.5% to 17.5%. Though it slightly missed market expectations (18.5%), the chosen monetary policy path has instilled confidence among investors. This is evident as the 5-year Turkish Credit Default Swaps have hit a new low, not seen since November 2021. Furthermore, Turkish government and corporate bonds denominated in USD have demonstrated an impressive performance, gaining +6% in 2023. In addition to these developments, it is noteworthy that Turkey has recently received substantial economic support from the UAE, totaling more than $50 billion. Could this influx of support help mitigate the sharp weakness experienced by the Turkish Lira? Source : Bloomberg.
Turkey 5-year CDS back to pre-election levels!
Market sentiment initially turned negative as the first-round results showed an unexpected rise in Erdogan's prospects for securing another presidential term. However, in a remarkable turnaround, Turkey's 5-year CDS has already returned to pre-election levels just days after Erdogan's re-election. The appointment of Mehmet Simsek as Minister of Treasury and Finance signals a positive shift towards a more conventional economic approach, bolstering market confidence post-election. Could this indicate a forthcoming adoption of a more conventional monetary policy strategy by the Turkish Central Bank? Source : Bloomberg
