MNI: PBOC Net Injects CNY40 Bln Via OMO Fri; Rates Unchanged

CHINA PBOC CONDUCTS CNY50 BILLION VIA 7-DAY REVERSE REPOS FRI

MNI: PBOC Sets Yuan Parity Lower At 7.1268 Fri; -0.32% Y/Y

CHINA SETS YUAN CENTRAL PARITY AT 7.1268 FRI VS 7.1270

MNI: BANXICO HOLDS INTERBANK RATE STEADY AT 11.00%

MNI BRIEF: Fed's Bowman Says Policy Appears To Be Restrictive

MNI BRIEF: Japan June Tokyo Core CPI Rises 2.1% Vs. May 1.9%

Japan May Ind. Output 2.8% M/M; Shipments +3.5% M/M

MNI BRIEF:Japan May Factory Output Hits First Rise in 2 Months

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Goldman Sachs: Challenges Have Now Fully Migrated To The Domestic Economy

TURKEY
  • The statement suggests that the Bank will continue on its gradual course in raising rates and appears to put more emphasis on its macro prudential measures to tighten policy. GS agree with the Bank that the current account pressures are likely to decline. Fiscal policy has been tightened and credit growth has slowed, and hence domestic demand in Goldman’s view will slow to allow the current account to balance in H2-2023. GS also concur that credit spreads have declined: the UAE has pledged to fund US$8.5bn of bonds as part of a longer-term investment scheme and gross exchange rate reserves have risen by close to US$15bn since the election.
  • The challenges, in Goldman Sachs’ view, have now fully migrated to the domestic economy and are largely twofold. First, how to incentivize the local population to save in TRY while inflation is running close to 40% both in annual and sequential terms and, second, how to fund the budget, including the cost of the FX-protected savings scheme without having to rely on the TMCB. In their view, the former requires sufficiently high deposit rates.
  • GS still think that introducing an interest rate at close to the deposit rates to put a floor on interest rates is the most likely means to achieve that. However, the fact that today's statement mentions quantitative tightening suggests that, at least for now, the Bank intends to use macro prudential measures to tighten liquidity sufficiently to do this. With respect to the budget, the recently announced tax hikes and the external funding from the Middle East should help but the majority of the funding will still need to come from the domestic banking system. That said, at current yields well below deposit rates and below both current and expected inflation, it is unclear to GS if funding from the banks would be forthcoming or if the banks do provide funding, how they can prevent their capital base being eroded.
BulletEM BulletEmerging Market NewsHomepage
BulletEM BulletEmerging Market NewsHomepage

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.