TR Economy & Updates

[KKF 2.0]

First assessments from international investors are in, guys.​

__________________​

INSTANT VIEW-Turkish lira in crosshairs after latest central bank chief ousted​

By Reuters Staff
4 Min Read

ISTANBUL, March 20 (Reuters) - President Tayyip Erdogan abruptly sacked Turkey’s central bank chief on Saturday, two days after a sharp interest rate hike to head off inflation, replacing him with a former ruling party lawmaker and critic of tight monetary policy.

Sahap Kavcioglu, a former member of parliament for Erdogan’s AK Party, replaces Naci Agbal who was appointed less than five months ago. Below are some reactions from analysts:

SELVA DEMIRALP, DIRECTOR OF THE KOC UNIVERSITY-TUSIAD ECONOMIC RESEARCH FORUM, IN ISTANBUL:

“This move clarifies what the president meant by ‘putting price stability aside’ when he announced the economic reform package last Friday. It is worrisome because I now expect economic policy to literally put price stability aside.

“This implies that the government will once again try to stimulate the economy by low interest rate policies. However, pushing short term stimulus against longer term risks can not be a hand that can be overplayed. I am worried because such a priority has a high potential to backfire by causing extreme pressures on the TL (Turkish lira) and contracting the economy even further.


“Agbal was one of the most successful central bank governors appointed by the AK Party. He adopted a long term perspective, a conventional approach with clear communication. He took over an economy at the edge of the cliff and took the right steps to reestablish credibility from zero. Unfortunately, he is not given a chance to finish what he started.”

CRISTIAN MAGGIO, HEAD OF EMERGING MARKET STRATEGY AT TD SECURITIES:

“This announcement demonstrates the erratic nature of policy decisions in Turkey, especially with regard to monetary matters. Kavcioglu’s appointment would suggest a higher risk of reverting to looser, unorthodox, and eventually mostly pro-growth policies from now on.

“The Turkish lira may easily sell-off 10-15%.... We will see this start on Monday, when Asia trading kicks in. The (central bank) and other Turkish authorities will try to lean against this move, likely deploying an array of measures. They may be somewhat effective for a start, but we question their ability to be successful for long in the current environment.”

WOLFANGO PICCOLI, CO-PRESIDENT OF RISK ADVISORY TENEO:​

“There are no institutions left in the country with any sort of independence and authority ... Erdogan is playing with fire at the worst possible time given (the) fragility of the key external backdrop.”

JASON TUVEY, ANALYST, CAPITAL ECONOMICS:​

The move is “likely to trigger large falls in the lira when markets open on Monday. It looks like the central bank’s efforts to fight the country’s inflation problem may come to an end, and a messy balance of payments crisis has become (once again) a real possibility.

“President Erdogan’s move leaves little doubt that all of the power in Turkey rests with him and this will result in rate cuts. This will simply make Turkey’s inflation problem even worse and risk premia on Turkish assets are likely to rise sharply.”

TIM ASH, SENIOR EM SOVEREIGN STRATEGIST, BLUEBAY ASSET MANAGEMENT:

“This decision is almost as bad as Brexit in terms of being the worst public policy decision I can remember in a country’s history ... Markets will express their opinions on Monday and it is likely to be an ugly reaction.” (Reporting by Jonathan Spicer. Editing by Mark Potter)

INSTANT VIEW-Turkish lira in crosshairs after latest central bank chief ousted

President Tayyip Erdogan abruptly sacked Turkey's central bank chief on Saturday, two days after a sharp interest rate hike to head off inflation, replacing him with a former ruling party lawmaker and critic of tight monetary policy.

www.reuters.com

 

[KKF 2.0]

We are currently the definition of banana state.

That dude is comparing Turkey to countries like Siwtzerland, Germany, Japan and the Netherlands. LMAO

 

[Constan]

I think what we are living new is the second attempt of the first coup but now isn't a military coup It is more like turning Turkey into a banana state something similar to Somalia. Maybe soon after the election we are gonna have two presidents because Erdogan will not accepts the result if he fails. Can you tell me who's destroying Turkey image now : Erdogan or all the other enemies such as Aliens, Gulen, PKK's, Isreal and LGBT (According to Erdogan).

 

[Anmdt]

Bets?
The banks has already pulled USD to 7.9 to buy ( 7.22~ something on friday, 7.4 after market closed, 7.6 in saturday morning after the news, and currently 7.9
PS. i am doing all planned purchases for electronics from today

 

[Nilgiri]

This whole earlier post (and following analysis/convo with others) I made is now thrown out the window into gutter it looks like.

It was predicated on the beginning statements of it:

Fiscal tightening of last few months till now has been appreciable by Turkish govt and was correct move to help stave off the immediate crisis that was gathering muster.

The interest rate was jacked up from around 10% (in november 2020) to about 17% by 2020-end.

Turkish Lira likely will settle mid this year again at the 6.5 - 6.7 range it enjoyed for most of 2020....but at this new setting of much higher interest rate (which will have impact on various industries reliant on credit like housing and also for industrial expansion by heavy capital buying etc).

Turkey has a window this year to re-adjust as capacities come back online not jsut in turkey but in world markets....and thus there is likely not a huge credit pull across the board.

Turkish central bank has announced it will not drop interest rate in short term....giving further assurance to currency setting around this level.

This is real pity as Turkey with reforms could have soaked in good investment (locked up worldwide due to covid and looking for release next couple years) with high interest rate with long term in mind....and use as window to help recover Turkish economy this decade (no matter what elections are won and lost....need to put country first).

But a choice looks to have been made to go for (yet again) GDP loan cycle + consumption boom-bust with all the inflation and lira degradation that will entail (at likely even worse level given the gas tank adulterant problem with loan-wrapping in Turkish banking sector).

Let it not be questioned the level of which politicians + appointed thugs can damage an economy past what they have damaged so far.

The next administration of Turkey (hopefully if they win) will have to land on ground running and not think one bit about winning their next election after that. They will have to reform deep and hard, there simply will not be any other choice as the damage will already be set in even more.

They need to put their country first....and they also need to find way that institutional degradation is not so easy in future by any political party.

If current batch win again by other sleight of hand or whatever wedge issue promotion.....Turkey might enter a really painful stasis for a generation.

 

[Sinan]

That dude is comparing Turkey to countries like Siwtzerland, Germany, Japan and the Netherlands. LMAO

Presidents wakes up in the morning. Takes the newpaper and see that some a columnist he likes critisizing the head of central bank.

Then he thinks, let's try this dude and appoints a columnist as the head of central bank. I'm not comparing my country with the ones you count.

 

[Glass🚬]

He's aware that he won't win the next election so he's sabotaging the start of next president.

 

[Constan]

He's aware that he won't win the next election so he's sabotaging the start of next president.

No way he thinks like that.

 

[Deliorman]

He's aware that he won't win the next election so he's sabotaging the start of next president.

Are we sure that there will be a “Next President”? Those corrupt leeches won’t go away with Democratic elections. They don’t give a damn neither about democracy, nor the economy, nor the State or its people... They hate them.

They are ready to turn the country into a new Syria but they won’t leave the sweet bone. And the worst of all is that you still have at least 35-40% that support all that.

 

[Philip the Arab]

We are currently the definition of banana state.

He appointed a columnist?

 

[Merzifonlu]

He appointed a columnist?

Yes, but he is a columnist with a doctorate in economics. The problem here is not with the person assigned. The main problem is that predictability is completely gone. This situation destroys the economy of any country in the shortest way.

 

[the]

Yes, but he is a columnist with a doctorate in economics. The problem here is not with the person assigned. The main problem is that predictability is completely gone. This situation destroys the economy of any country in the shortest way.

https://twitter.com/i/web/status/1373058817789992964

How does one have a doctorate in economics, when his belief is that high interest rates cause inflation?
He wants to persue negative interest rates because he thinks it will lower inflation...........

If interest rates are negative, consumption and investment will be increase (forcibly), which will cause infation. Or, people will withdraw their cash from banks and stuff it into mattresses - which would decrease spending and result in weak economic growth.

Lets just say his policies align with that of Erdogan's.

 

[Constan]

Even if he appoint Christine Lagarde, she will fails.

 

[the]

I can't find the source but supposedly on wednesday Erdogan will hold a talk about the economic prospects leading to 2023.
I'm pretty sure I read about it before Agbal was sacked - so perhaps the appointment of a new CB chief was planned.

 

[KKF 2.0]

He appointed a columnist?

He's a banking expert and professor but his POV is very unorthodox. He's repeating what Erdoğan is telling him and what Erdoğan wants is lowering the interest rates regardless of the disastrous outcome for the economy.

 

[the]

https://twitter.com/i/web/status/1373703484843958273

Asian markets were opened. • Dollar / TL increased by more than 10% and reached 8.20.

 

[Anmdt]

Banks have pumped USD to buy: 8.2-8.5, sell:7.4-7.6
Banks are literally collecting currency from 7.6 at the weekend when markets closed, note it was 7.22 in friday
It will definitely pass 8.

https://twitter.com/i/web/status/1373703484843958273

Asian markets were opened. • Dollar / TL increased by more than 10% and reached 8.20.

So it was the reason, i have opened the banking app for something and surprised to see it has risen around 10% since it shows the sum in Lira
It will definitely pass 8.5 or 9 when European market and moreover Turkish one is open.

Can't figure out whether it is a Tarantino movie or real life.

 

[the]

Banks have pumped USD to buy: 8.2-8.5, sell:7.4-7.6
Banks are literally collecting currency from 7.6 at the weekend when markets closed, note it was 7.22 in friday
It will definitely pass 8.


So it was the reason, i have opened the banking app for something and surprised to see it has risen around 10% since it shows the sum in Lira
It will definitely pass 8.5 or 9 when European market and moreover Turkish one is open.

Can't figure out whether it is a Tarantino movie or real life.

Its at 8.4 now

There goes any progress made under Agbal.

 

[KKF 2.0]

Banks have pumped USD to buy: 8.2-8.5, sell:7.4-7.6
Banks are literally collecting currency from 7.6 at the weekend when markets closed, note it was 7.22 in friday
It will definitely pass 8.

8 TRY per Dollar? The gov't should open a bottle of its finest ayran if your prediction becomes reality. I'm expecting 10 TRY. Besides, I admitt that monday will be rough but rest assured, the worst is yet to come. The next weeks will be a nightmare for Turkey.

The saddest part is that Erdogan single-handedly nullified the positive effects of the latest hikes in our interest rate.

He is either not in touch with the reality of the common citizen of Turkey or he's been used by his "friends" and familiy members.

 

[Deliorman]

Devam!!!