Encouragin­g decision

Tim Ash, strategist, BlueBay Asset Management

Dünya Executive - - REPORT -

It is encouragin­g that the central bank has discovered orthodoxy. I think most people don’t like this tightness run via the late liquidity window, but rates over 12% suggest at least tight policy in the short term. I think notable herein is the tug of war being played out on the lira. Locals are still selling – perhaps this reflects concern over domestic political trends, the over-concentrat­ion of power around President Recep Tayyip Erdogan, and the fourth extension of the State of Emergency, plus nervousnes­s over the state of relations with Europe amid the spat with Germany. Foreign portfolio investors have been more willing to put money to work in Turkey attracted by high carry in a low yielding environmen­t and I think the central bank’s now more hawkish policy is helping to cement their confidence. (July 27)

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