MNI China Daily Summary: Wednesday, June 12

MNI BRIEF: Beijing Willing To Safeguard Chinese Firms - MOFCOM

MNI BRIEF: China May CPI Flat At 0.3% Y/Y

MNI: PBOC Conducts CNY2 Bln Via OMO Weds; Liquidity Unchanged

MNI: PBOC Sets Yuan Parity Lower At 7.1133 Weds; -1.75% Y/Y

CHINA PBOC INJECTS CNY2 BILLION VIA 7-DAY REVERSE REPOS WEDS

EZ/UK T-Bill Calendar: 1/3/6-Month UKTB Auction on Friday

Rather Encouraging CPI Details Despite Services Acceleration (2/2)

Rather Encouraging CPI Details Despite Services Acceleration (1/2)

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

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

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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

USD/TRY Sees Unprecedented Volatility as Erdogan Steps in With FX Measures

TURKEY
  • USD/TRY closed a monumental -19.40% lower in yesterday’s session after pulling back -27.42% from the fresh all-time high at 18.3633 following new FX management measures from Erdogan.
  • The measures effectively provide a floor on TRY deposits at 0% returns against other currencies as a means of offsetting dollarization.
  • However, analysts note that this moves FX risk to the public sector balance sheet, and is likely to drive the sovereign credit risk premium higher.
  • This has not solved the underlying problems of ultra-low rates, credibility concerns at the CBRT and Turkey’s BOP issues and may prove to be a temporary patch to slow TRY depreciation in the near-term.
  • The move itself may be more aggressive than is justified due to market positioning being massively short TRY – hitting stop losses along the way, and finally signals the last straw for the CBRT’s pain threshold.
  • We have been noting risks to a shift in policy towards unconventional policy tools for some time now due to Erdogan’s unwillingness to hike rates, and this will likely represent the watershed to more complicated policy in Turkey.
  • In the near-term, we can likely expect extensive volatility in thin markets as investors gauge the new policies.
  • Intraday Sup1: 11.0990, Sup2: 10.00, Res1: 13.6614, Res2: 15.2853
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
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.