Turkey has gone and done it now.
Recall what we said on Sunday evening in our week ahead preview:
Meanwhile, don’t forget about Turkey where between surging inflation and jitters about Ankara’s deteriorating relationship with the West, the lira has come under extreme pressure over the past couple of months prompting a series of desperate moves by the central bank to support the currency.
Of course that comes amid significant pushback from Erdogan, the self-described “enemy of interest rates.” This week, they’ll probably raise rates. Generally speaking, it looks like we’ll get a 100bp hike in the late liquidity rate.
Simply put: if they don’t deliver, the lira is fucked.
Well sure enough:
- TURKEY LATE LIQUIDITY WINDOW LENDING RATE 12.75 %
- TURKEY’S CENTRAL BANK LEAVES OVERNIGHT BORROWING RATE AT 7.25%
- TURKEY CENTRAL BANK OVERNIGHT LENDING RATE 9.25 %
- TURKEY CENTRAL BANK BENCHMARK RATE 8 %
So that looks like a 50bps hike on the late liquidity window, well short of estimates and here’s the reaction in the beleaguered lira:
And you know, I don’t know why anyone is surprised by this. If it hasn’t occurred to you yet that Erdogan doesn’t give a good goddamn what anyone thinks, then there is no hope for you. I mean it was less than 48 hours ago when he said this in Ankara:
Attempts to legitimize rate hike pressures through short term manipulations is a vain effort.
Any questions?
