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.
Full analysis here:
Executive Summary:
- Turkish President removes CBRT Governor just days after 200bps rate hike
- Market blindsided, TRY slides as much as 15%
- Focus turns to any intervention and/or response from CBRT to market rupture
Key Takeaways:
Agbal's removal has had a major destabilising effect on markets, and will raise significant questions about Turkey's monetary policy approach going forward. As the linch pin and core catalyst behind the recent redevelopment of CBRT credibility, TRY stability, investor confidence in Turkey and budding de-dollarisation. Especially as Erdogan's human rights and economic reforms delivered negligible effect in markets.
Figure 1: USD/TRY One-Day Change – Sharpest one-day slide in TRY for decades
Source: MNI/Bloomberg
This could mean markets bid goodbye to Agbal's drive for policy orthodoxy and prepare for a return to late liquidity windows, overnight swap rates, interventions through state lenders and low-intensity capital controls through the BDKK to limit TRY short positions (with the eventual possibility of full blown capital controls, should conditions deteriorate beyond prior historic low point).
From here, major risks include inflation expectations de-anchoring, with policy solely focused on delivering lower rates and credit impulse-fuelled growth to boost the popularity of Erdogan's AKP. Moreover this may be complemented by reactively controlling TRY volatility through any unconventional instrument at the CBRT's disposal.
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.