9 Mar 2015
Politics keeps weighing on the Turkish lira – Rabobank
FXStreet (Edinburgh) - According to Piotr Matys, Strategist at Rabobank, the increasing political effervescence surrounding the CBRT could undermine the lira.
Key Quotes
“While high yields should act as a magnet for capital inflows fuelled by ECB’s full-scale QE, foreign investors have actually reduced their exposure to Turkish bonds due to escalating concerns about the CBRT’s independence”.
“In the current negative domestic environment we see limited scope for a retracement in EUR/TRY”.
“In fact, a full-blown conflict involving the CBRT would squeeze EUR/TRY to 2.90 and up, and cement the upside trend in USD/TRY”.
“Given that we do not expect the Fed to raise rates until Q4, a correction in USD/TRY might unfold in the coming months, but we would see such a pullback as an opportunity to buy dips as long as pressure on the CBRT prevails”.
Key Quotes
“While high yields should act as a magnet for capital inflows fuelled by ECB’s full-scale QE, foreign investors have actually reduced their exposure to Turkish bonds due to escalating concerns about the CBRT’s independence”.
“In the current negative domestic environment we see limited scope for a retracement in EUR/TRY”.
“In fact, a full-blown conflict involving the CBRT would squeeze EUR/TRY to 2.90 and up, and cement the upside trend in USD/TRY”.
“Given that we do not expect the Fed to raise rates until Q4, a correction in USD/TRY might unfold in the coming months, but we would see such a pullback as an opportunity to buy dips as long as pressure on the CBRT prevails”.