17 Feb 2015
Turkish lira poised to pick up pace – JP Morgan
FXStreet (Edinburgh) - Analysts at JP Morgan see the Turkish currency reverting its current weak outlook in the near term.
Key Quotes
“Political pressure on the CBRT to cut rates seems to be easing, while our view remains that the CBRT will refrain from cutting the upper band of the corridor; both should be supportive of TRY FX in the short run”.
“We see potential for the lira’s recent underperformance to reverse. Market concerns on the currency, in part due to the political pressure exerted on the CBRT to ease monetary policy, seems to be receding given the more supportive comments extended to the central bank from Deputy Prime Minister Babacan in recent days”.
“President Erdogan’s economic adviser (amongst others) also suggested that USD/TRY between 2.30 to 2.50 is acceptable. This implies that USD/TRY above 2.50 would be problematic, even for the government, due to concerns over potential household dollarization and corporate hedging of USD liabilities”.
“This further supports our house view that the CBRT will not cut the upper band of the interest rate corridor in their policy”.
Key Quotes
“Political pressure on the CBRT to cut rates seems to be easing, while our view remains that the CBRT will refrain from cutting the upper band of the corridor; both should be supportive of TRY FX in the short run”.
“We see potential for the lira’s recent underperformance to reverse. Market concerns on the currency, in part due to the political pressure exerted on the CBRT to ease monetary policy, seems to be receding given the more supportive comments extended to the central bank from Deputy Prime Minister Babacan in recent days”.
“President Erdogan’s economic adviser (amongst others) also suggested that USD/TRY between 2.30 to 2.50 is acceptable. This implies that USD/TRY above 2.50 would be problematic, even for the government, due to concerns over potential household dollarization and corporate hedging of USD liabilities”.
“This further supports our house view that the CBRT will not cut the upper band of the interest rate corridor in their policy”.