Central Bank reshuffle and first reflections

After the change of mandate at the Central Bank, the markets started the week quite volatile, and the USDTRY in illiquid transactions in Asia reached 8.47 levels.

After the change of mandate at the Central Bank, the markets started the week quite volatile, and the USDTRY in illiquid transactions in Asia reached 8.47 levels. There has been a decline to the level of 7.70 due to the settlement of liquidity with the opening of the market and the fact that the first announcements were aimed at dissipating the negative atmosphere in the market. Of course, as the theme of volatility and uncertainty is still active, pricing behavior can vary greatly.

 

Naci Ağbal was a name that the markets trusted and whose policies were considered right. The main concerns regarding Central Bank policies with the new president; moving away from orthodoxy, early interest rate cuts before inflation fell, and restrictive measures to be implemented to prevent the depreciation of the lira in this period. The first statements of the new president continue the emphasis on price stability and point out that there will be no change in CBRT policies. At least, we understand that the 19% interest will apply until the April MPC, from the statement "the meetings will be held on the scheduled date". However, the probability that the interest rate will be cut earlier than anticipated and the inflation pick up has increased more and point to more uncertainty. In order to prevent fluctuation in lira, tools such as tightening and swap rates can be put into use by means of side instruments such as RRs.

 

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