29 Jan 2014
Flash: Turkish Central Bank more aggressive than expected - Societe Generale
FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale notes that the Central Bank of Turkey was far more aggressive than expected last night.
Key Quotes
"The Central Bank of the Republic of Turkey delivered a far, far more aggressive policy tightening last night than expected, raising the overnight lending rate from 7.75% to 12% and the 1-week repo from 4.5% to 10%. The latter is intended to be the new benchmark policy rate."
"The Lira has rallied sharply, and global risk sentiment has improved. Obviously, rate hikes of this magnitude cannot be maintained for longer than a few months before the negative domestic economic effects offset any benefits from boosting credibility and restoring confidence, but for now, market nerves are calmed."
"Risk assets everywhere are stronger and the biggest loser in FX is the yen. Our EM colleagues like being long TRY/ZAR here, ahead of the SARB policy announcement which will likely see rates left on hold at 5%."
Key Quotes
"The Central Bank of the Republic of Turkey delivered a far, far more aggressive policy tightening last night than expected, raising the overnight lending rate from 7.75% to 12% and the 1-week repo from 4.5% to 10%. The latter is intended to be the new benchmark policy rate."
"The Lira has rallied sharply, and global risk sentiment has improved. Obviously, rate hikes of this magnitude cannot be maintained for longer than a few months before the negative domestic economic effects offset any benefits from boosting credibility and restoring confidence, but for now, market nerves are calmed."
"Risk assets everywhere are stronger and the biggest loser in FX is the yen. Our EM colleagues like being long TRY/ZAR here, ahead of the SARB policy announcement which will likely see rates left on hold at 5%."