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Authorities Eye New Plan to Fund TRY Purchases

TURKEY
  • Bloomberg reports that Turkish authorities are planning a suite of new programmes to fund foreign investors via swaps contracts to buy TRY assets, which could come into effect as soon as July.
  • The headlines come as the CBRT – in conjunction with banking regulators and the finance ministry - become more active on macroprudential measures in an attempt to curb loan growth, incentivise Liraization and stem price pressures. These measures vary from tighter conditions for credit card use to adjusting collateral requirements for TRY-denominated bond portfolios.the banking regulator this month cut the risk-weighting of FX-denominated commercial loans in order to prevent FX purchases with loans made in TRY, while the finance ministry staged a fierce defence of the costs of their TRY savings programmes – a key tenet in the authorities’ drive to push savings to TRY and from FX and precious metals.
  • The importance of the exchange rate will not be lost on the authorities, with consumer confidence this month dropping to its lowest levels on record – in a relationship that remains tightly wound with the strength (or lack thereof) of the TRY.
  • A recent survey carried out by Hurriyet will make for troubling reading for Erdogan, showing that gold remains the favoured investment for Turks. More concerning is the increased favour of foreign currencies, with 24% preferring FX investments relative to just 8% one year ago.
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  • Bloomberg reports that Turkish authorities are planning a suite of new programmes to fund foreign investors via swaps contracts to buy TRY assets, which could come into effect as soon as July.
  • The headlines come as the CBRT – in conjunction with banking regulators and the finance ministry - become more active on macroprudential measures in an attempt to curb loan growth, incentivise Liraization and stem price pressures. These measures vary from tighter conditions for credit card use to adjusting collateral requirements for TRY-denominated bond portfolios.the banking regulator this month cut the risk-weighting of FX-denominated commercial loans in order to prevent FX purchases with loans made in TRY, while the finance ministry staged a fierce defence of the costs of their TRY savings programmes – a key tenet in the authorities’ drive to push savings to TRY and from FX and precious metals.
  • The importance of the exchange rate will not be lost on the authorities, with consumer confidence this month dropping to its lowest levels on record – in a relationship that remains tightly wound with the strength (or lack thereof) of the TRY.
  • A recent survey carried out by Hurriyet will make for troubling reading for Erdogan, showing that gold remains the favoured investment for Turks. More concerning is the increased favour of foreign currencies, with 24% preferring FX investments relative to just 8% one year ago.