Sent ment mproves

Dunya Executive - - REPORT - Econom st, Barclays Cap tal

The risk sentiment has improved in Turkey, with the currency posting its strongest rally since the sell-off in August. Markets have remained constructive although the Central Bank stayed on hold at a time when real policy rates are shifting to negative territory. This week’s headline inflation figures will be the focus, especially after the CBRT inflation report highlighting how monetary policy is increasingly becoming data dependent. We expect headline inflation to accelerate to 25.4 percent despite the government’s campaign to cut prices by 10 percent. The government’s recent wide range of tax cuts has spooked the currency as they signaled some fiscal loosening should have a limited effect on the upward trajectory of headline inflation, in our view. The inflation data release on November 5 coincides with the resumption of U.S. secondary sanctions against Iran, renewing concerns over Turkey’s 16 percent oil imports from Iran. However, we believe Turkey will likely negotiate waivers with the U.S. following some reduction of oil imports. The release of Pastor Brunson and renewed cooperation in Syria and over the Khashoggi case reduced risks to a further escalation of tensions with the U.S., in our view. (November 2)

Newspapers in Turkish

Newspapers from Turkey

© PressReader. All rights reserved.