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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.
Executive summary:
- Further tightening from the CBRT is likely this week, with the benchmark one-week repo rate expected to be raised by a further 250bps to 20.00%.
- The trade-off for the bank remains tightening via the one-week repo rate or, as suggested by local press, tweaking the rules and regulations around FX tools and KKM accounts to manage financial conditions.
- As such, markets may point to recent macroprudential adjustments as a substitute to the larger rate hike that the economic backdrop requires– an approach mimicked in the July rate decision.
See our full preview, with sell-side analyst views, here:
The most notable change to Turkey’s FX toolkit since the July meeting has been the recently adopted rule designed to incentivise regular lira deposits over FX-protected accounts. According to the decree published over the weekend, commercial banks whose clients don’t convert a certain ratio of their KKM deposits to regular lira accounts will have to purchase additional government bonds. This is the first step weaning individuals off KKM accounts which were designed to protect savers from excessive lira depreciation.
On the data front, Turkish CPI jumped by 9.49% M/M in July, with the headline figure seen rising 47.83% Y/Y, a notable increase from +38.21% in June. Pipeline inflation remains a key cause for concern in Turkey. Last month, the government boosted fuel taxes by almost 200%. The increase, which will affect different types of fuels including petrol and diesel, will help meet financing needs stemming from the February earthquakes and allow the Treasury Ministry to maintain strong cash reserves, however, may boost inflation in H2.
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.
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